By Byron Kaye
Australian health insurer Medibank Private said on Monday it is planning an IPO to raise between A$4.3 billion and A$5.5 billion ($3.7 billion to $4.8 billion), potentially making it the largest listing of a state-owned company in nearly two decades.
Medibank, set up by the government in the 1970s as a cheap health insurance option, plans to sell up to 2.75 billion shares in a range of A$1.55 to A$2.00, the company said in its prospectus, lodged with authorities on Monday.
It is expected to start trading on Nov. 25.
The company also gave its first profit and dividend forecast, saying it expects proforma operating profit to grow 10.5 percent in the year to June 30 to A$282.1 million, with revenue growth up 6.2 percent.
It forecast a fully franked dividend of A$0.049 per share - a yield of 4.2 percent to 5.4 percent.
Analysts had expected the IPO for 100 percent of Australia's biggest health insurer to raise between A$4.1 billion and A$5.7 billion.
If Medibank fetches more than A$4.6 billion, the only larger IPO of an Australian state-owned asset will have been telco Telstra Corp Ltd which raised A$14 billion in 1997.
The Medibank sale is a key part of a larger privatisation programme aimed at rescuing Australia from what the conservative government has called a debt crisis fueled by mounting health and pension bills and the end of a mining investment boom.
State and federal governments have identified some A$120 billion of potential sales in the next two years including ports and electricity networks.
Bankers working on the deal say they brought the listing forward by a month to November to capitalise on strong demand for the IPO, and not because they were afraid of market volatility which has wiped 7 percent off the value of Australian shares since the sale was announced in August.
Falling commodities prices linked to China's economic slowdown and concerns about weakness in the European economy have sent investors scurrying for cover after the S&P/ASX 200 reached an all-time high in September.
"Obviously volatility last week was pretty pronounced, but at the same time we've had a very very strong response to the marketing campaign so far," James McMurdo, chief executive officer of Australia and New Zealand for Deutsche Bank, a joint lead manager for the sale, told reporters.
"The institutional response both locally and offshore has been exceptionally strong."
Medibank is the biggest in what is shaping as Australia's biggest year ever for IPOs, with total proceeds in the first nine months up more than 400 percent from the same period last year.
Health companies have featured strongly in new capital raisings, with the next largest listing of the year behind Medibank that of private hospital operator Healthscope Ltd, which raised A$2.26 billion.