Retail investors bid $4.8 billion for Medibank shares

Health insurer IPO looks heavily oversubscribed and not all the results are in yet

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Minister for Finance, Mathias Cormann, has today announced that demand by the general public for Medibank private shares is likely to be over $4.8 billion.

"Processing of retail offer applications has yet to be finally complete, however it is estimated that total demand for the General Public Offer, Policyholder Offer and Employee Offer will exceed $4.8 billion", the media release says.

By comparison, the Broker Firm Offer generated close to $12 billion in bids, but was scaled back to $1.5 billion. In other words, for each 8 shares bid for in that offer, on average subscribers will receive just 1.

And bidders in the broker offer may still be subject to a further 20% clawback – or reduction of around $300 million worth of shares.

The Institutional Offer opens tomorrow and will run until Thursday, 20 November 2014. It remains to be seen the total amount institutions will bid for shares, but given the private health insurer is likely to be among Australia's top 50 companies, many fund managers are likely to be forced to bid.

The Finance minister notes that no decisions will be made on the split of share allocations between the different offers until after the Institutional Offer has been completed. The final price and the number of Medibank private shares investors will receive, based on the allocation criteria, is expected to be announced by Tuesday, 25 November.

Given the subscriptions so far, the float is likely to be heavily oversubscribed. Retail investors will probably pay the guaranteed top amount of $2.00 per share, although institutions may well pay much more. 2.75 billion shares are on offer, valuing Medibank at around $5.5 billion at the $2.00 offer price.

Analysts are also expecting the government to offer retail investors a juicy bone in the shape of being allocated more shares than the institutions. That could force many larger fund managers to dip into the market and buy shares, which could result in decent stag profits when Medibank lists on the ASX, which could be as early as next week.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »