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Why there is only upside in pre-registering for Medibank Private shares now

There are many investors still smarting from not participating in the first share offer of the government-owned Commonwealth Bank of Australia (ASX: CBA) in 1991 and the CSL Limited (ASX: CSL) float in 1994. Excluding dividends, the former has appreciated 1,200%, while the latter has appreciated a staggering 3,095%. Over the same time periods the S&P/ASX 200 Index (INDEXASX: XJO) has risen 272% and 164% respectively.

Some Medibank Private facts:

Medibank Private is currently owned by the Australian government and is the largest private health insurer with a 29.5% market share. BUPA is slightly smaller with a 27% share in a highly concentrated industry where five funds have an 83% share of the market. NIB Holdings Limited (ASX: NHF) is the only other publicly listed company and ranks fourth in terms of market share. After listing in November 2007, its shares have appreciated 244%, despite the S&P/ASX 200 Index falling 17%.

NIB and financial services company AMP Limited (ASX: AMP) were mutual funds that were changing structure when they floated. This allowed policyholders to obtain free shares. However, in passing from taxpayer hands to a listed entity, there are no free shares allocated to Medibank Private customers.

What is the order of preferential share allocation after pre-registering?

1. Eligible policyholders (private customers) will receive a greater share allocation.

2. Non policyholders will receive a preferential allocation by comparison with…

3. Non policyholders who failed to pre-register.

Are there any disadvantages in pre-registering?

Pre-registering ensures that you will be notified when the prospectus is ready. It carries no obligation to proceed with purchasing the shares. However, should you choose to apply for shares you will receive a preferential allocation.

How do I pre-register?

You may pre-register anytime from today until October 15 by completing the form that may be accessed by clicking on this link.      

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Motley Fool contributor Mark Woodruff does not own shares in any of the companies mentioned in this article.

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