DataRoom AM: Medibank momentum

Mum and dad investors look set to win big from the largest Australian IPO in almost 20 years, while the race for Ten Network heats up.

The pricing is in on the widely anticipated Medibank Private float and mum and dad investors appear to have won out over the big end of town.

Elsewhere, there’s plenty of activity around Ten Network ahead of an imminent bid deadline, PanAust and OZ Minerals consider an offshore copper play and the assets of a NZ rich-lister attracts Australian attention.

The federal government is set to raise $5.7 billion through the float of private health insurer Medibank Private after locking in a price of $2.15 a share for institutions. Retail shareholders, on the other hand, will pay just $2 a share, leaving so-called mum and dad shareholders on track to reap a healthy profit if the price merely holds the $2.15 mark when trading commences on Tuesday.

And there’s no shortage of such investors in the float, with retail stockholders to receive 60 per cent of the shares on offer, ahead of local institutions with 22.9 per cent and offshore funds with 17.1 per cent. The IPO is the largest in Australia since the $14bn float of Telstra in 1997.

In media, Discovery Communications and Foxtel remain at the forefront of the potential auction of Ten Network as they prepare a cash-and-share offer before bids fall due on December 2. According to The Australian Financial Review, a Discovery-Foxtel offer will create two classes of shares in Ten to allow existing shareholders to benefit from any post-takeover upside, a move designed to appease disgruntled key shareholder Bruce Gordon.

The development comes as Time Warner reportedly drops out of the race, leaving Anchorage CapitalProvidence Equity Partners and Saban Capital as the only rivals to Discovery. However, Seven West Media has hinted it may also be interested in a significant stake should media reforms allow it.

In resources, copper miners PanAust and OZ Minerals are said to be weighing a bid for Anglo American’s three copper mines in Chile. A sale is likely to reap $1bn, with Mick Davis’ X2 Resources seen as the favourite.

Also in mining, Paladin Energy will launch a significant capital raising this week. The planned cash injection will also incorporate news that an offshore investor will join the significant shareholder list, the AFR reports.

Meanwhile, New Zealand’s richest man Graeme Hart is mulling the sale of Carter Holt Harvey Building Supplies, a leading Australasian supplier of wood products. An auction should secure at least $1bn, with Boral and Fletcher Building seen as prospective buyers.

In infrastructure, Spanish construction heavyweight Ferrovial is jostling for a seat at the table in the planned $30bn sale of ‘poles and wires’ assets in NSW. The interest is linked to a strong push into local utilities as it weighs a revised bid for Transfield Services.

In the IPO market, Estia Health has received $625m in commitments from cornerstone investors ahead of its December 5 listing, while Pacific Smiles has enjoyed a stellar first day of trade on the ASX, rising 37 per cent on Friday.

Elsewhere, Steadfast Group has joined the running for QBE Insurance’s $350 million-plus Underwriting Agencies distribution unit, according to the AFR. Bids from interested parties are due on December 3.

Finally, local smallgoods giant Primo Group has accepted a $1.45bn takeover offer from Brazilian food processing behemoth JBS, while Starwood Hotels has offloaded its Sheraton hotel in Sydney for $463m to China-based Sunshine Insurance Group.