Medibank Private Limited: The Initial Public Offering
(7 pages of text)
Case (Pub Mat)
In November 2014, an intern at Top Dog Wealth Management in Brisbane, Australia, was assisting with a market evaluation and company evaluation for Medibank Private Limited (Medibank). The upcoming Medibank initial public offering (IPO) was set to be one of Australia’s largest and was expected to generate more than AU$4 billion from shareholders who were keen to own a piece of the country’s largest private health insurer. Because the intern was new to the deal, her supervisor gave her access to his notes and directed her to use Bloomberg terminals. As she read through this material, the intern pondered some important questions: What was Medibank worth? Which valuation methods should she use?
This case can be used in undergraduate or postgraduate finance courses with units on corporate finance, capital raising, and/or valuation. Medibank’s IPO provides opportunities for students to undertake the following activities:
Perform a discounted cash flow valuation of an established and market-leading firm with relatively stable gross margins and healthy revenue growth.
Practice relative valuation techniques using capitalized earnings, capitalized earnings before interest and taxation, and book value.
Explore the benefits and costs associated with IPOs in the context of an offer without an underwriter.
Health Care Services
Australia, Large, 2014
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