By David Stringer
Australia sees strong investor interest in the initial public offering of Medibank Private Ltd., the country’s largest health insurer, as the government presses on with sales of state assets to cut a budget deficit.
The Melbourne-based company is expected to list on the Australian stock exchange in December, Finance Minister Mathias Cormann told reporters today. An offer prospectus is scheduled to be available from late next month, he said.
The Medibank IPO will come after share sales by Australian companies this year reached about A$9 billion ($7.9 billion), the highest since 2005, according to data compiled by Bloomberg. Offerings have included hospital operator Healthscope Ltd. (HSO) and catering and services company Spotless Group Holdings Ltd. (SPO) The benchmark S&P/ASX 200 Index rose 1.8 percent over the past year.
"We have made a judgment that the market conditions are right, which includes a judgment about the level of retail interest, which we expect to be strong." Cormann said in Melbourne.
Australia’s Coalition government, led by Prime Minister Tony Abbott, is seeking to cut spending and sell assets as it attempts to reduce a budget deficit estimated to have swollen to A$49.9 billion in the year through June. Nomura Holdings Inc. in March valued Medibank at about A$4 billion based on peer-group analysis.
Proceeds from the Medibank sale are intended to be used for investments in infrastructure, Cormann said.
Scoping Studies
The government has appointed advisers to prepare scoping studies on the potential sales of other assets including Defence Housing Australia, the Royal Australian Mint and the registry business of the Australian Securities and Investments Commission, a corporate regulator.
Macquarie Group Ltd., Deutsche Bank AG and Goldman Sachs Group Inc. were hired by Australia in April to manage the Medibank IPO.
"By selling Medibank Private, we will remove the current conflict which the federal government is in by being both the regulator and the largest market participant," Cormann said.
Investors can pre-register for a prospectus by Oct. 15 to receive a preferential share allocation, Cormann said. Medibank policy customers will be allocated more shares under that plan, he said.
Australia provides its citizens with free or subsidized health care at clinics and hospitals. It also encourages people through tax benefits to take out private health insurance.
About 47 percent of Australians are covered by private insurers for hospital treatment, while 55 percent are covered for other services such as dental and optical, according to a statement in June from the government’s Private Health Insurance Administration Council.
To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net
To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net Jake Lloyd-Smith, Garry Smith
Source: Bloomberg
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