Nib Listing Heralds Change In The Private Health Sector
Sydney Morning Herald
Monday October 29, 2007
INSTITUTIONAL investor appetite for the shareholder-activated private health market will be tested today as corporate advisers to NIB, the country's sixth-largest insurer, begin a book-building operation before its stock market listing this week.
Just under 10 per cent of NIB's policyholders, who voted overwhelmingly in July to drop the insurer's mutual status in exchange for shares, have traded in their equity to provide enough stock for the investment bank JP Morgan to offer to fund managers.NIB, which will be the first private health insurer to float on the ASX, is expected to be valued at between $400 million and $500 million on its debut on the market on Thursday.Its listing will also herald big changes in the private health sector, with the second largest insurer, MBF, resisting all attempts by BUPA Australia to forge a $2 billion-plus merger and opt instead for a flotation next April.MBF is likely to be valued at three times more than NIB and will provide a tough competitor for the Newcastle-based group, which has made no secret of its desire to use its new-found equity strength to buy other insurers and leapfrog those companies above it.However, their listings could be dwarfed by the only truly national insurer, the publicly-owned Medibank Private, which the Howard Government is determined to sell off if it is returned to power next month. A sale will be less likely if Labor wins government.NIB will have a better idea of its worth and actual debut price after today's one-day-only offer to institutions, which has been priced at between 70 and 90 cents a share.It will be valued between 11.5 and 14 times earnings. The immediate comparison will be with the other listed insurers, although they focus on household, car and commercial cover as opposed to private health, whose premiums are still controlled by federal regulators.The offer has been marketed to 80 corporate investors and fund managers, although with the market still feeling the after-effects of the recent volatility no pre-sale orders had been placed before the formal opening this morning.NIB will have about 280,000 retail shareholders, all of whom were members of the old mutual and most of whom remain policyholders.They will hold at least 80 per cent of the shares after the flotation, and if institutions pick up the rest on offer, the stock will remain tightly held in the initial few months.The recently restructured company has been promoting itself as a growth stock before listing, given its highly ambitious takeover plans set up by its chief executive, Mark Fitzgibbon.He intends to grow NIB by acquisition, although the company is raising only $50 million in the float and is not issuing any new shares.The cash will pay for a $25 million fund to help the community in the Hunter Valley and around Newcastle, with the rest to cover its listing fees and the costs of demutualisation.
© 2007 Sydney Morning Herald
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