Australia's Medibank IPO prices at A$2.15 a share, raising A$5.7 billion

By Reuters

Nov 23, 2014 06:20 AM EST

Australia said on Sunday it would list state-owned health insurer Medibank Private Ltd (MPL.AX) with a market capitalization of A$5.679 billion ($4.9 billion), exceeding the top end of a range indicated in its IPO filing a month earlier.

In what is set to be Australia's biggest initial public offering of a state asset since telco Telstra Corp Ltd (TLS.AX) in 1997, Finance Minister Mathias Cormann said he sold 40 percent of some 2.7 billion Medibank shares on offer to institutional investors at A$2.15 each.

Retail investors, who will receive 60 percent 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$2.00, but strong demand prompted the government to bump up the range to A$2.00 to A$2.30 in a bookbuild 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," 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 confirms the immense popularity of Asia's biggest IPO in two years as investors vie for a slice of Australia's growing healthcare system, thanks to an aging population and generous government rebates.   

It also suggests retail investors can expect a strong initial performance, having received the shares at a discount of 7 percent 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 capitalize on what was until recently a buoyant equity market.Cormann said local brokers would get 22.9 percent of the shares, with overseas institutional stockbrokers getting 17.1 percent. The shares debut on the Australian Securities Exchange on Tuesday.

Health-related companies have dominated the year's listings, making up about three-quarters of the cash raised in 2014 IPOs.

The year's previous biggest listing, hospital firm Healthscope Ltd (HSO.AX), which raised A$2.25 billion, ended Friday at an 18 percent premium to its issue price.   

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

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