Morningstar head of equities research Peter Warnes.
The timing and pricing of Medibank's sharemarket listing is 'laughable' and the investment bankers running it need a "sharp and powerful uppercut", Morningstar's head of equities research Peter Warnes has told clients.
Writing about the float in his weekly newsletter, Mr Warnes did not hold back.
"With an indicative price range of $1.55 to $2.00 – a mere 29 per cent spread [we can assume some pretty heavy sarcasm here] – retail investors (voters) will be asked to apply for shares by 14 November without knowing the most important piece of information in any investment decision – the PRICE," he says.
He bemoans the fact that the price will be set by "an infernal institutional (non-voters) bookbuild" from 18 to 20 November.
"How often does the Finance Minister buy something without knowing the price?" he asks tartly.
"Even worse, I understand broker firm bids (retail investors again) close on 28/29 October," he adds. "This is a $4 to $5 billion deal, not the size of Alibaba!"
Warnes says he can't understand why the bookbuild can't be held before the close of retail applications, instead of the "farcical" current situation where "retail investors are significantly overbidding, knowing they will only be allocated a fraction of the bid".
"This creates false demand which creates a false final price. These investment bankers and their bloody bookbuilds really need a sharp and powerful uppercut."
He questions why somebody didn't have the gumption to say: "the retail price is $1.65 (a P/E of 17.5) and the institutional price is $1.80 (P/E of 19)". At $1.65 the market cap would be $4.5 billion, calculates Warnes.
He then sums up: "I do not believe demand for the issue is a problem - the problem, as with most bookbuilds, is the uncertainty around the price - especially when retail investors are treated like mushrooms, kept in the dark and fed you know what by investment bankers.
