The Australian Government is outlining a divestment plan for its health insurance company Medibank Private through an initial public offering for A$4bn ($3.7bn), as part of a strategy to sell A$100bn of state assets.
Australian Finance Minister Mathias Cormann said, Medibank Private will be divested through an initial public offering in the 2014-15 fiscal year starting in July, subject to market conditions.
Medibank Private, which occupies nearly 30% of the Australian health insurance market, serves 3.8 million customers and garnered A$315m profit during 2013.
In an official release, Cormann said, "Following careful consideration of the scoping study the Government has decided to progress the sale of Medibank Private through an initial public offering.
"The independently prepared scoping study reaffirmed our long-held view that there is no compelling reason for the Government to own Medibank Private."
The minister further said that an independent scoping study had found no evidence that premiums would increase as a result of the sale of Medibank Private.
The sale will remove the inherent conflict currently in place where the Government is both the market regulator and the owner of a large participant in the market, Cormann added.
Medibank Private is a commercial business operating in a well-functioning, well-regulated competitive private health insurance market with 34 competing funds.
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