Record forecast to spur iSelect listing
Insurance comparison site iSelect expects its revenue for 2013 to climb 8.6 per cent to $122 million, driving its profit to a record high of $14.5 million as the company prepares to list on the Australian Securities Exchange this month.
The company, which offers online comparisons in health, life and car insurance, is looking to raise $215 million in new funds through issuing 116 million shares.
Shares in iSelect will be priced at $1.85 a share, according to a prospectus lodged with ASIC. The listing is scheduled for June 24.
On listing, the company will be valued at $479 million.
Ninemsn, the joint venture between Nine Entertainment Company and Microsoft, will offload all of its 62 million shares in iSelect for $113.5 million. The company acquired a 35 per cent stake in iSelect in 2006 for $20 million.
Ninemsn is expected to make close to six times its initial investment.
"Based on this strong historical performance, we believe the company is well positioned to capitalise on the continued growth in Australian online comparison," Damien Waller, iSelect's executive chairman and co-founder, said in the prospectus. He said iSelect was well placed to achieve its earnings forecast of $30 million this calendar year.
iSelect generates much of its revenue through commission payments. These are typically in upfront fees or trailing commissions.
Mr Waller will retain 31 million shares, or 12 per cent of the equity holding in the company after the float, which is estimated to be valued at $58 million at the offer price.
iSelect is estimated to have had more than 15 per cent of market share of new insurance policy sales in 2012. Consumers bought about 100,000 policies through the company. But the prospectus reveals it has been in conflict with two of the country's largest health insurance companies over commissions paid to the aggregator and claims of misleading advertising.
Medibank Private and Bupa do not use the comparison sites, though Medibank sells its cheaper AHM brand through iSelect.
Medibank Private managing director George Savvides recently accused comparison sites of increasing the cost of insurance policies for consumers, calling for greater disclosure on commissions that the health funds paid to aggregators.
Despite iSelect's strong growth in recent years, the company warned investors that it could be exposed to private health insurance rebate changes or removal by the federal government.
iSelect is heavily dependent on revenue from its health business unit, which provides 81 per cent of its total revenue.
A pre-marketing report into the float by one of iSelect's brokers, Credit Suisse, said the insurance aggregator was well placed to capitalise on growth in online transactions. The report said it had a strong brand and "first mover" advantage in comparison websites.
Brokerage Baillieu Holst is acting as the second lead manager on the float.