“This was largely due to the starting position of Genesis’ balance sheet looking a little stretched given the size of its development pipeline,” he said.

The offer comprises an underwritten placement of $100m at $2.15 per share and an underwritten 1 for 7.9 pro rata renounceable rights offer to raise $300m at a price of $2.05 per share.

Genesis Energy’s share price closed at $2.41 on Friday, making the offer a significant discount to the trading price.

The Government last year said it would be open to capital raisings among its three 51%-owned controlled power companies – Genesis, Mercury and Meridian – after Frontier Economics had suggested the big three faced capital constraints.

“Genesis’ proposed investments will directly contribute to enhancing energy security, including through enabling Genesis to bring more flexible capacity to the market which can be used to address dry-year risk,” Finance Minister Nicola Willis said.

For the time being, the other two – Mercury and Meridian – are not expected to follow suit.

Market participants said the Genesis issue would be strongly supported.

“We’ve got a good set of loyal shareholders, and we’ve set out a pretty aggressive $2 billion growth programme out to 2032 that serves our customers, our shareholders, and the country really well, so we would expect it to be well supported,” chief executive Malcolm Johns told the Herald.

Genesis financial result

The power generator and retailer also reported record first-half normalised earnings before interest, tax, depreciation, amortisation and financial instruments (ebitdaf) of $307m – a record – compared with $222.0m in the previous comparable period.

The company’s net profit for the half was $95.1m, up from $70.3m.

Johns said the result demonstrated the value of the Genesis portfolio, which includes the coal and gas-driven plant at Huntly, solar farms and hydro stations in both islands.

“Clearly, we’ve had the support of hydro conditions, but we should also remember that in July, we had record-low lake inflows and record-low snowpack in the South Island, and it wasn’t until the spring storms that we actually got the turnaround in hydro and snow,” he said.

Looking ahead, Genesis said its 2026 normalised ebitdaf guidance remained unchanged at $490m-$520m.

For 2028, the normalised ebitdaf target increased from mid to upper $500m to upper $500m – the higher end of a previously indicated range.

The company published its 2032 normalised ebitdaf outlook of $650m-$750m.

“That’s based on our current view of the market and conditions going forward, but over the last two years, we’ve put in place the foundations for building new renewables, and that will reduce the average cost of generation in Genesis,” Johns said.

Genesis last year struck deals (Huntly Firming Options) with the other major generators to help fund the 1.1-million-tonne coal stockpile at Huntly, which is used to back up the national grid in dry years.

Johns said the company’s 500,000-strong customer base held the greatest potential for future growth.

Commenting on the Government’s plan for a liquefied natural gas (LNG) terminal at Port Taranaki, Johns said gas from the plant could be used for the gas-driven turbine at Huntly – Unit 5 – which is running at 50% capacity at the moment because of a lack of fuel.

Should the Government proceed with LNG, Genesis would use the Huntly Firming Option structure to fund Unit 5, and for it to be used as standby.

Johns said with the 1.1-million-tonne coal stockpile and topped-up gas storage facilities, Genesis was well positioned for the winter.

“Current expectations are that winter 2026 conditions will revert toward more normal seasonal patterns, with thermal baseload and firming capacity available to support system security,” Genesis said in its result.

Coal-powered generation fell to 164 gigawatt hours (GWh) from 710GWh in the prior corresponding period, as thermal assets shifted from baseload to flexible firming.

“This integrated portfolio response reduced Genesis’ carbon emissions and lowered the cost of generation,” the company said.

“The result reinforces the structural flexibility advantage of Genesis’ portfolio – enabling earnings to be defended in dry periods and enhanced in favourable conditions.”

For the Genesis offer, Jarden acted as the equity underwriter while Citi acted as the financial adviser.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.