The government could reap $5.8 billion from the sale of Medibank Private, with fund managers betting the company will be priced at $2.10 per share, leaving room for retail investors to benefit after the listing.
Investors said that pricing the stock at $2.10, which is in the bottom half of the newly upgraded price range, would balance the duelling concerns of getting the best price for the health insurer while also ensuring the stock does not flop when it debuts next Tuesday.
“It’s very well bid within the $2 to $2.10 range, we hear,” one fund manager told Fairfax Media.
“The government could certainly price it higher but $2.10 would be a good price – at that level retail shareholders get some upside but you’re not going to see a wholesale sellout, and it also leaves something on the table for institutions. $2.10 equates to 22.5 times earnings 2015 – the taxpayer has got to be happy with that.”