About 2.7bn shares are expected to be sold for between $1.55 and $2, which will place the business in the ASX 100
The Abbott government could raise up to $5.5bn from the privatisation of Australia’s biggest health insurer, with shares expected to be sold for between $1.55 and $2 each.
The finance minister, Mathias Cormann, announced details of the Medibank Private float in Melbourne on Monday, saying the indicative share price range would mean the newly floated company would be valued at between $4.3bn and $5.5bn.
Cormann said this would place the business among the top 100 companies on the ASX. About 2.7bn shares are expected to be sold in the float, to be finalised by December.
The government intends to sell down its entire shareholding and use the funds on its asset recycling scheme aimed at encouraging infrastructure construction. More than 750,000 Australians pre-registered their interest in receiving a share offer prospectus.
Australian retail investors would be able to apply for Medibank shares from 28 October, Cormann said.
“A price cap for retail investors means that Australian residents who choose to apply for shares will not pay any more than $2 per share, even if the final price is set above the indicative range,” he said.
The government revealed preferential arrangements for Medibank and ahm policyholders and other people who pre-registered for a prospectus:
- Australian residents who pre-registered their interest in receiving a prospectus can be allocated an amount of shares up to 15% higher than general public offer applicants who did not pre-register.
- Eligible Medibank Private and ahm policyholders who pre-registered can be allocated an amount of shares up to 30% higher than general public offer applicants who did not pre-register.
- Eligible Medibank Private and ahm policyholders who did not pre-register can be allocated an amount of shares up to 15% higher than general public offer applicants who did not pre-register.
Last month, the government launched an advertising campaign promoting the opportunity for Australians to buy shares in Medibank Private.
The sale of the government-owned insurer is long-standing Coalition policy but opposed by Labor, which says the move is driven by ideology rather than evidence it would increase competition.
In 2006 the parliament passed the Howard Coalition government’s legislation allowing a Medibank sale and the subsequent Labor governments did not repeal this law. This means the forthcoming privatisation will not require fresh legislation to pass parliament.
Cormann said there was no compelling policy reason for the government to continue to own Medibank, which he described as “a commercial business operating in a well-functioning and competitive private health insurance market with 34 competing funds” .
“The sale will also remove the current conflict where the government is both the regulator of the private health insurance market and owner of the largest market participant,” he said.