Senator the Hon Mathias Cormann
Minister for Finance
Date: Friday, 29 August 2014
REPORTER: The Federal Government has fired the starting gun on the public float of the nation’s biggest health fund, Medibank Private. The Finance Minister Mathias Cormann has announced the approval of a public share offer. It will open at the end of September so that the company can be listed on the Australian Stock Exchange in December. The privatisation is expected to be worth up to $4 billion which will be piled back into infrastructure. Senator Cormann spoke to Alexandra Kirk in Canberra.
MATHIAS CORMANN: The advice that the Government has received from our business advisers is that the market conditions are right to proceed with an Initial Public Offering of the size of Medibank Private by the end of this calendar year and we have considered that advice and we have acted on that advice.
ALEXANDRA KIRK: Will Medibank Private policy holders be given any preferential treatment in say for example first dibs or a discount on the share price?
MATHIAS CORMANN: The timetable from here is that by the end of September all Australians will be able to pre-register their interest in Medibank Private shares. By the end of October people will be able to receive the Medibank Private share offer prospectus. That prospectus will include all of the specific detail about the structure of the sale including the issues relating to Medibank customers.
ALEXANDRA KIRK: But you have already started thinking about these things presumably?
MATHIAS CORMANN: Part of conducting the sale of an asset of the size of Medibank through a proper professional and disciplined process is to make relevant announcements when you have reached the appropriate milestones in the process to make those announcements. All aspects when it comes to the structure of the sale will be part of the Medibank Private share offer prospectus which will be lodged with ASIC towards the end of October and which will be revealed publically at that time.
ALEXANDRA KIRK: Is there some pressure on the Government to ensure that Medibank Private remains in Australian ownership or at least a majority Australian ownership?
MATHIAS CORMANN: Well the sale is being conducted consistent with the requirements in the Medibank Private Sale Act 2006. That Sale Act of course provides for certain protections, for example it provides that no single investor can hold a share of no more than 15 per cent in Medibank Private.
ALEXANDRA KIRK: So that’s going to be the only limit?
MATHIAS CORMANN: That is a very significant limit and of course it is a very significant safeguard.
ALEXANDRA KIRK: What about the split between institutional investors and individual or so called mum and dad investors?
MATHIAS CORMANN: We are very keen for Australians to invest in this IPO. We will be offering shares to both retail and institutional investors domestically and internationally. But all of the detail when it comes to the structure of the IPO will form part of the Medibank Private share offer prospectus.
ALEXANDRA KIRK: Considering you want to sell it. You saying that there will be absolutely no effect on health premiums. That it won’t put any upward pressure on health premiums?
MATHIAS CORMANN: That is not only me saying so, it is the ABC Fact Checker saying so too. Because the ownership structure of Medibank Private is completely irrelevant when it comes to the setting of premiums. That is because number one, Medibank Private will continue to operate in a highly competitive market and will have to be mindful of competition from other private health funds when it sets pricing and number two premium setting is highly regulated in Australia. Of course there is a process there which ensures that premium increases are appropriate and that process will not change.
REPORTER: Finance Minister Senator Mathias Cormann speaking to Alexandra Kirk.