Australia seeks to launch biggest state IPO since Telstra's in 1997

SYDNEY (Reuters) - Australian health insurer Medibank Private said on Monday it is planning an IPO to raise between A$4.3 billion and A$5.5 billion (S$4.8 billion to S$6.14 billion), potentially making it the largest listing of a state-owned company in nearly two decades.

Medibank, set up by the government in the 1970s as a cheap health insurance option, plans to sell up to 2.75 billion shares in a range of A$1.55 to A$2.00, the company said in its prospectus, lodged with authorities on Monday.

It is expected to start trading on Nov. 25.

Analysts had expected the IPO for 100 per cent of Australia's biggest health insurer to raise between A$4.1 billion and A$5.7 billion.

If Medibank fetches more than A$4.6 billion, the only larger IPO of an Australian state-owned asset will have been telco Telstra which raised A$14 billion in 1997.

The Medibank sale is a key part of a larger privatisation programme aimed at rescuing Australia from what the conservative government has called a debt crisis fuelled by mounting health and pension bills and the end of a mining investment boom.

State and federal governments have identified some A$120 billion of potential sales in the next two years including ports and electricity networks.

Bankers working on the deal say they brought the listing forward by a month to November to capitalise on strong demand for the IPO, and not because they were afraid of market volatility which has wiped 7 per cent off the value of Australian shares since the sale was announced in August.

Medibank also gave its first profit and dividend forecast, saying it expects proforma operating profit to grow 10.5 per cent in the year to June 30 to A$282.1 million, with revenue growth up 6.2 per cent.

It forecast a fully franked dividend of A$0.049 per share - a yield of 4.2 per cent to 5.4 per cent.