Australia raised A$5.68 billion (US$4.9 billion) selling shares of Medibank Private Ltd in the country’s second-largest initial public offering (IPO).
The government sold about 2.7 billion shares in the nation’s biggest health insurer at A$2.15 apiece for institutional investors and A$2 for individuals, Australian Finance Minister Mathias Cormann said on a conference call on Sunday.
The sale brought the total amount raised by Australian IPOs this year to A$15.9 billion, the highest since at least 1997, data compiled by Bloomberg show.
“It has been a very strong year for Australia IPOs, despite what has happened with market volatility in the last three to four months,” Evan Lucas, a markets strategist in Melbourne at IG Ltd, said by phone. “The support from equity markets in 2013 and 2014 is a huge contrast to the previous two years when things were very slow.”
Australian Prime Minister Tony Abbott is cutting spending and selling assets as he seeks to rein in a budget deficit that swelled to A$48.5 billion in the year through June.
Australia’s benchmark stock index has slipped 4.8 percent since Aug. 29, when some details of the IPO were announced, amid increasing signs that economies from Japan to Europe are losing momentum.
The government had raised the indicative IPO price range to A$2 to A$2.30 a share, citing strong demand from institutional investors. The shares were previously marketed at A$1.55 to A$2 apiece. The price for individual investors was capped at A$2.
“The government has looked after the moms and dads in granting retail investors a premium when the stock starts trading tomorrow [today],” Lucas said. “Because of the scalebacks, institutions will be underweight and there is likely to be solid buying tomorrow as they top up their holdings.”
The sale price values Medibank at 22.9 times estimated earnings for the year ending June next year, according to data compiled by Bloomberg. NIB Holdings Ltd, the nation’s only other listed health insurer, trades at 19.3 times profit on that basis.
“The offer has generated a very high level of demand both from domestic and offshore institutional investors,” Cormann said from Perth on Sunday.
Medibank “will be more flexible in pursuing growth opportunities into the future, they will have better access to capital markets and they will have the opportunity to perform and do the best they can without having the restrictions of government ownership imposed on them,” he said.
Abbott’s government in April hired Macquarie Group Ltd, Deutsche Bank AG and Goldman Sachs Group Inc to manage the Medibank IPO. It has also assigned advisers to scoping studies on other asset sales including Defence Housing Australia, the Royal Australian Mint and the Australian Securities and Investments Commission’s registry business.
The Medibank offering surpassed the A$4.3 billion raised when the government of Queensland state sold a stake in rail operator Aurizon Holdings Ltd in 2010, according to data compiled by Bloomberg. It is Australia’s biggest IPO since Telstra Corp’s sale in 1997.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to