Nov 24, 2014

    Australia to net $6.4b from insurer's IPO


    AUSTRALIA said yesterday it would list state-owned health insurer Medibank with a market capitalisation of A$5.7 billion (S$6.4 billion), exceeding the top end of a range indicated in its initial public offering (IPO) filing a month earlier.

    In what is set to be Australia's biggest IPO of a state asset since telco Telstra in 1997, Finance Minister Mathias Cormann said he sold 40 per cent of some 2.7 billion Medibank shares on offer to institutional investors at A$2.15 each.

    Retail investors, who will receive 60 per cent of the shares on offer, will pay $2 a share.

    The Medibank prospectus initially said the shares would sell for between A$1.55 and A$2, but strong demand prompted the government to bump up the range to A$2 to A$2.30 on Wednesday.

    "The outcome of the offer is excellent and the level of interest in Medibank Private, both here in Australia and from global investors, positions the company well for its debut," Mr Cormann said.

    The sale of the insurer would "contribute to an efficient, competitive and viable private health insurance market here in Australia", he told reporters.

    The higher-than-expected price tag confirmed the immense popularity of the region's biggest IPO in two years as investors vie for a slice of Australia's growing health-care system, thanks to an ageing population and generous government rebates.

    It also suggested that retail investors can expect a strong initial performance, having received the shares at a discount of 7 per cent to institutional investors.

    Medibank is a late high point in what is shaping as Australia's biggest year of new listings, as vendors hope to capitalise on what was until recently a buoyant equity market.

    Mr Cormann said local brokers would get 22.9 per cent of the shares, with overseas institutional stockbrokers getting 17.1 per cent. The shares debut on the Australian Securities Exchange tomorrow.

    Health-related companies have dominated the year's listings, making up about three-quarters of the cash raised in this year's IPOs.

    The year's previous biggest listing, hospital firm Healthscope, which raised A$2.25 billion, ended Friday at an 18 per cent premium to its issue price.

    The year's fourth-largest listing, aged-care operator Estia Health, will open a broker offer to raise A$834 million the day after Medibank lists. It plans to list next month.