Medibank Private’s institutional bookbuild is “well covered with high quality demand at $2.15”, according to an email sent to clients on Thursday by joint lead managers Deutsche Bank, Goldman Sachs and Macquarie Capital. This represents a multiple of 22.9 times earnings 2015.
The books for the initial public offering close for all investors at 12 noon (AEDT) on Thursday.
In an attempt to push up the price at which they can sell stock in the book-build, the government and adviser Lazard lined out some ground rules for share allocations. Fund managers were told that firm bids made in the first 24 hours of the book-build that came at above the final price, and early bids above upper end the indicative price range of $1.55 to $2.00, would be given preferential treatment.
The government revised its indicative price range for institutions to $2.00-$2.30 from $1.55-$2.00. in response what Finance Minister Mathias Cormann described on Wednesday as “very strong demand” in the first 24 hours of the bookbuild from domestic and offshore institutional investors.
As a result, a “bidding frenzy” is occurring, one fund manager said. “I don’t think there will be any preference given because I think everyone is in there,” the fund manager said. Given most institutions – and many retail investors – do not expect to receive their entire bid, one fund manager warned the management to not take the volume of the book at face value and price it too high, because it may not have support in the market on debut. “They don’t want it to go pear shaped on day one.”
