Medibank manager spots sale on horizon
There are strong claims this week that the Federal Government will move to sell Medibank Private, possibly during its current term, in a move that could bring in billions.
The managing director of the Government-owned health insurer says he believes a sell-off to drum-up funds will be hard to resist for the profiteers, and it may be good for Medibank too.
Medibank Private MD George Savvides said in an interview this week: “I think it is designed that way and certainly we will respond in a manner required to meet the expectations of the owner... but I suspect it will be in the first term.”
Legislation has been passed to allow a float or trade sale and the Coalition party flagged it as a likelihood in the lead-up to the election, making a sale of Medibank Private at some point seem all but assured.
The possible sell-off would see the Government ditch one of its most successful assets, but would pad the coffers comfortably. Medibank Private has recently declared an 83.8 per cent increase in full year profit, now up to $233 million.
Membership sits just under 4 million people, with the company claiming a significant 29.5 per cent market share. It had been valued at $4 billion under the Howard government; speculators say the price today may be around half that figure. Mr Savvides says it should be re-valued quite strongly.
“The organisation continues to be the market leader and that's obviously an important criterion in valuing the organisation... it continues to grow in terms of customers and its bottom line,” he said.
As for whether the sale would be good or bad for the company, Mr Savvides says it could go either way.
“There are things that listed companies can do in terms of raising capital and expanding, especially offshore,” he said.
“Medibank certainly is a mature organisation now, nearly a $6 billion company paying taxes and dividends. So it may be a time to actually be owned more broadly.”
“I think it's far too early to be able to engage on policy change, but there will be a conversation, I'm sure... not just from Medibank but other health funds and other providers like hospital groups, who will be concerned to make sure that Australians continue to be incentivised to take out private cover,” Mr Savvides says.