INSURANCE broker iSelect is seeking to raise more money before a sharemarket listing or trade sale next year.
The raising follows the appointment of former corporate development head David Chalmers as chief financial officer last month, and the appointment of Greg Camm, formerly of ANZ Banking Group and AMP, as a director.
With its punchy ads and relatively long history, iSelect is Australia’s biggest insurance infomediary and has long been considered likely to float. The raising would value the 12-year-old business at more than $350 million.
The bid to raise more than $25 million at $18.50 a share this week comes as iSelect reported $112 million in revenue for the 2012 financial year, and earnings before interest, taxation, depreciation and amortisation of $24.1 million. Both were up on the previous year.
Health funds, which insure about half of Australians, were rocked this year by the federal government’s decision to means-test the private health insurance rebate from July.
Health insiders say the consequences of this decision won’t be known until the second half of 2013, when prepaid policies expire and policyholders must choose to either retain, dump or downgrade their coverage in the face of large effective price rises.
But iSelect said yesterday that regardless of the impact of means-testing, it believed its fundamentals were strong and a sale in the first six months of 2013 was a possibility.
Health insurance provides the bulk of iSelect’s business, but the Melbourne-based business also helps people choose between products in car, life and travel insurance, broadband, utilities and home loans.
It makes money through one-off payments from service providers for the recruitment of new members and through trail commissions over the life of policies. The federal government’s Future of Financial Advice laws have banned trail commissions to financial planners.
Last month, listed health insurer NIB said that health funds ought to get used to customers chopping and changing their policies. Twenty-two per cent of NIB’s health insurance sales for the year to June came from insurance brokers, more than double the previous year.
Although between 15 and 20 per cent of people switching their policy or new to health insurance use iSelect, Australia’s two largest health funds, Medibank and Bupa, largely bypass the channel.
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