1. Why did the Government sell Medibank Private?
This decision followed the Government’s careful consideration of the Medibank Private Scoping Study report.
Medibank Private is a commercial business operating in a well-functioning and competitive market with 34 private health insurance providers. The Scoping Study found no evidence that health insurance premiums would increase as a result of Medibank Private being sold. Medibank Private will need to continue to compete against other funds for policy holders and will need to continue to comply with relevant regulatory requirements around changes in premiums.
Selling Medibank Private has removed the inherent conflict where the Government was both the market regulator and the owner of a large participant in the market.
2. What was the Scoping Study?
The Medibank Private Scoping Study was a process undertaken by expert advisers which culminated in a report including recommendations to Government on relevant issues associated with the sale of Medibank Private.
It was framed around the Government's objectives for the sale, which were:
- to contribute to an efficient, competitive and viable private health insurance industry;
- to maintain service and quality levels for Medibank Private customers, including in regional and rural Australia;
- to ensure the sale process treats Medibank Private employees in a fair manner, including through the preservation of accrued entitlements;
- to minimise any post sale residual risk and liabilities to the Government; and
- having regard to all of the above objectives, to maximise the net sale proceeds from the sale.
The Scoping Study provided the basis for the Government’s decision that the sale of Medibank Private should proceed and that it should occur by way of an IPO in the 2014-15 financial year
3. What will be the impact of the sale on Medibank Private policy holders?
There will be no impact on policy holders as a result of the sale process. Medibank Private will continue to operate its business as usual in a highly competitive market. Medibank Private operates under the same regulatory environment as other private health insurance providers. There are 34 funds in the market to provide and ensure that customers have a wide choice of private health insurance products. The sale of Medibank Private, will of itself, not lead to any changes in the way that the industry, including Medibank Private, is regulated by Government.
For more information on how the private health insurance industry is regulated, go to the Public Health Insurance Advisory Council (PHIAC) or the Department of Health (DOH).
The Government expects the sale of Medibank Private will strengthen competition in the private health insurance industry, which is good for all private health insurance policy holders across all health funds, including Medibank Private policy holders.
Enhanced competition should lead to better quality and more innovative services, and better value overall for policy holders across the industry.
4. Did Medibank Private policy holders get anything?
Eligible Medibank Private and ahm policy holders who applied for shares received a preference in share allocations. If an eligible Medibank Private or ahm policy holder pre-registered and applied for shares, this preferential allocation was greater.
For more information on the Offer please call 1800 998 778.
5. Will premiums increase once Medibank Private is no longer Government-owned?
The Scoping Study found no evidence that premiums would increase as a result of the sale of Medibank Private.
Medibank Private will need to continue to compete against other funds for policy holders and will need to continue to comply with relevant regulatory requirements around changes in premiums.
As with all other funds, Medibank Private must justify the need for any premium change before it is approved. All rate applications are closely scrutinised by the Private Health Insurance Administration Council and are subject to approval from the Minister for Health.
Medibank Private will continue to be subject to the Government’s strong private health insurance regulatory regime.
6. Will privatisation lead to reduced services?
In the Government’s view, a privatised Medibank Private will need to continue to be just as, if not more, focused on serving its customers given the level of competition in the private health insurance industry.
7. When did the sale occur?
The Medibank Private Share Offer is now closed. Medibank Private listed on the Australian Securities Exchange on 25 November 2014.
For more information on the Offer please call 1800 998 778.
8. Who were the appointed advisers for the sale?
The Department of Finance appointed three Joint Lead Managers for the sale of Medibank Private. The role of the Joint Lead Managers included project management and co-ordination of the logistics of the IPO.
In addition to the Joint Lead Managers, the Taskforce was assisted in the sale process by a range of expert advisers. These advisers included Lazard Pty Ltd as Business Adviser, Herbert Smith Freehills as Legal Adviser, Ernst and Young as Accounting Adviser, Newgate Communications as Communications Adviser and the Australian Government Solicitor as Process/Probity Adviser. Advisers appointed to the sale can be viewed on the AusTender website.
9. How much did you raise from an IPO?
The Offer raised $5.679 billion in proceeds.
10. How much did the shares cost?
The final price for Medibank Private shares for institutional investors was set at $2.15 per share. The final price for retail investors was set at the retail price cap of $2.00 per share .
11. What will you do with the money?
Proceeds from the sale of Medibank Private will be re-invested into productivity enhancing infrastructure through the Government’s Asset Recycling Initiative.
1 The Retail Price will only apply to the first $250,000 worth of Shares (rounded down to the nearest Share) allocated to Applicants under the Retail Offer. If Retail Offer Applicants are allocated Shares above $250,000, they will pay the Final Price for those Shares.