The news that Auckland Council is already engaging financial advisors in Australia on the yet-to-be-confirmed airport selldown has left some councillors wondering why they weren’t kept in the loop
Auckland Council is putting out feelers with financial advisors in Australia who could aid with the selldown of public shares in Auckland Airport, should asset sales go ahead next month.
Melbourne financial consultants Flagstaff Partners has been engaged to work out the best timing and execution strategy if and when it becomes time to slap the ‘For Sale’ sign on the council’s 18.09 percent stake.
But although council officials say they’ve kept elected members in the loop, councillors expressed surprise at the reveal, which was first reported in The Australian earlier this week.
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The consultation across the Tasman represents the ‘unpausing’ of a pause the council had previously announced to this process back in March. Council officials at the time said they were holding on while council worked through the budget process.
Now the council is saying that although no decision has been made yet on whether the selldown will go ahead, it has engaged the financial advisors to provide specialist independent advice.
Auckland Council general manager of financial strategy and planning Ross Tucker said it was prudent to seek advice on the implementation of the potential move.
“Auckland Council has therefore engaged Flagstaff Partners as financial advisor to provide specialist independent advice to the council on its consideration of a potential sale of the council’s 18.09 percent shareholding in AIAL, the NZX and ASX listed company that owns and operates Auckland International Airport,” Tucker said.
He also said the councillors were kept up to speed.
“Elected members have been kept informed about the sale options, issues and process as part of annual budget planning through reports, briefings and workshops.”
But Manurewa-Papakura ward councillor Angela Dalton said she was surprised to read the article in The Australian after seeing it shared on social media.
“I saw it posted and thought 'what the?’” she said. “I shared it with some other councillors and they were all surprised as well.”
She said that although it might be a sensible move to start seeking advice, not being upfront and transparent with the governing body or the public didn’t inspire trust in the process.
“It doesn’t help with the credibility of the process – if they would just be upfront with the process, what happens is it starts to undermine it,” she said. “It’s not our first rodeo with these budgets.”
Waitematā and Gulf ward councillor Mike Lee wondered where the airport dividend was on a rundown of the council’s projected revenue.
When he asked council officials during a confidential briefing why this potential income had been omitted, they said it was not factored in as the shares would be sold on July 1.
Lee said it would surely take months to get an enormous deal like this across the line, “unless you are already talking to a buyer? No response.”
“I am increasingly convinced that the budget deficit appears to have been contrived simply to log-roll the sale of the airport – the biggest single privatisation of a publicly-owned asset in Auckland’s history,” Lee said.
Lee said pre-empting governing body decisions with behind-the-scenes work like this was “deeply troubling”.
In the council’s original tender letter seeking advisors back in early February, it specified that advice would need to cover “council objectives; selldown options; strategies to minimise execution risks; strategies to maximise value; timing considerations; engaging other advisors and brokers, communication strategy; investor engagement.”
The same letter outlined that these advisors would be unlikely to be considered for any executory role in the actual sale of the shares.
Aucklanders have been split on whether the shares should be fully sold, partially sold, or left untouched.
Of the almost 33,000 people who made submissions on the budget, 25 percent supported full sale, 28 percent supported partial sale, 34 percent didn't support any sale and 13 percent chose 'Other' or 'I don't know’.
It means more than half of those who gave their feedback were keen for some kind of sale – although the difference between a partial and full sale is significant.
