The federal government has confirmed demand by retail shareholders for the $4.3 billion-plus Medibank Private float ballooned to more than $4.8 billion, as investors await pricing, stock allocation and next week’s sharemarket debut.
The retail offer – open to the general public, policyholders and employees – closed on Friday.
Healthy response: Finance Minister Mathias Cormann reports significant interest in the Medibank IPO. Photo: Luis Ascui
It drew “significant interest”, Finance Minister Mathias Cormann said, noting that the processing of retail applications had yet to be completed.
However, the estimated demand is eclipsed by demand from stockbrokers on behalf of clients, which came in at $12 billion. The broker firm offer was scaled back to $1.5 billion.
The composition of the Medibank register is unclear, with the institutional book-build kicking off on Tuesday.
“No decisions will be made on the overall split of share allocations between the retail and institutional offers, nor between domestic and offshore institutions, until the share offer has been completed,” Mr Cormann said.
The government’s joint lead managers, Deutsche Bank, Goldman Sachs and Macquarie Capital, will open the institutional books on Tuesday, before closing the ledger at noon on Thursday.
The health insurer’s shares are due to start trading on the local bourse on November 25.
The shares were offered in a range of $1.55 to $2, meaning the federal government would raise between $4.3 billion and $5.5 billion. The strong demand, coupled with the government – via its advisers – urging fund managers to bid for shares early, and high, has intensified pricing pressure. Offshore investors are a top priority, too.
“Pre-listing shadow markets were already trading Medibank shares at $2.15 last week,” Citigroup told clients on Monday.
“There hasn’t been as much hype around an IPO (initial public offering) since the 2003 float of Promina,” said Ben Griffiths, a portfolio manager at Eley Griffiths Group.
“Offshore investors fell over themselves then, and they seem to be doing the same again . . . The real upside resides with better claims management rather than cost outs.”
Mr Cormann reiterated there was a retail investor price cap of $2.
The government also retains the right to claw back a further 20 per cent of the shares allocated to the broker firm offer, following the close of the offer for institutions. The government is understood to be seeking to sell Medibank shares worth 55 per cent to 60 per cent of the company to retail investors. Retail investors took 60 per cent of the first tranche of Telstra’s float.