The government will reap up to $5.5 billion from the sale of Medibank Private when it lists on November 25, the health insurer's prospectus has shown.
The document, which was lodged with the corporate regulator on Monday, showed that the shares would be priced between $1.55 and $2.00.
The indicative share price range suggests a market capitalisation of between $4.3 billion and $5.5 billion, which would place Medibank as one of the market's top 100 companies.
The valuation suggests a price to earnings ratio of between 16.5 to 21.3 times.
Medibank shareholders will receive a fully franked dividend for the seven months to June 30, 2015 of 4.9¢ a share, according to forecasts contained in the prospectus. That implies a 2015 financial year dividend yield of between 4.2 and 5.4 per cent.
Medibank provided a final sweetener to the Coalition by delivering a dividend worth $238.8 million. The dividend included a $42 million final payout for the 2014 financial year and a $196.8 million special dividend.
Finance Minister, Senator Mathias Cormann said the initial public offering would include a price cap of $2 a share for retail investors, even if the final price is set above the indicative range. The cap will apply to the first $250,000 allocated to individual applicants under the retail offer.
Medibank's financial performance for the year ended June 30 is also revealed officially for the first time, despite the numbers having found their way across the desks of institutional investors in pre-marketing research in the past weeks.
The market leading insurer's group revenue rose to $6.4 billion, from $5.9 billion in the previous year. Revenue from insurance premiums rose 5.7 per cent to $5.6 billion. The cost of medical claims rose 5.5 per cent to $4.9 billion.
Claims growth is forecast to ramp up in the 2015 financial year, rising 6.1 per cent to $5.2 billion. Premium revenue is forecast to rise 6.2 per cent to $6.0 billion.
Although rising medical claims allow insurers to increase the premiums they charge customers, they can hurt affordability for members, and reduce earnings margins. For every $1 Medibank earns in premium revenue, it pays out about 87¢ in claims.
Medibank managing director George Savvides has flagged reining in costs paid out to healthcare providers like private hospitals as one of the main ways that the company will grow earnings.
Just over 750,000 Australians have pre-registered for the Medibank float.
The prospectus revealed the timetable for the initial public offering. Following the lodgement of the document on Monday, Mr Savvides and advisers from the three investment banks marketing the float will begin meeting with fund managers this week.
The institutional bookbuild, which will determine the final listing price, will run between November 18 and November 20. The insurer will debut on the Australian Securities Exchange on November 25.
