nib announce capital raise, entry into NDIS sector

nib holdings limited (ASX: NHF) today launched a ~$135 million fully underwritten equity placement of ordinary shares to existing and new institutional shareholders. It plans to raise a further ~$15 million through a share purchase plan and the proceeds from the equity raising will be used to fund its entry into Australia’s NDIS sector as a Plan Manager.

nib’s first acquisition is Maple Plan, a Plan Manager. nib is actively assessing further acquisitions.

New shares issued through the institutional placement will be offered at a price to be determined via a bookbuild process (subject to an underwritten floor price of $6.90, which represents an approximate discount of 8% to the last closing price as at 11 October 2022).

nib shares have been placed in a trading halt while the institutional placement is conducted. Eligible existing Australian and New Zealand shareholders will be able to purchase up to $30,000 per shareholder under the SPP, which is not underwritten. The target for the SPP is $15 million. nib has the discretion to determine the final amount.

nib Managing Director Mark Fitzgibbon said the capital raise follows nib’s three-year exploration of opportunities in Australia’s National Disability Insurance Scheme (NDIS).

“The NDIS has become a vitally important part of Australia’s social capital and a significant economic sector. Already it supports 530,000 participants with more than 800,000 expected by 2030. NDIS funding is expected to double from around $29 billion in 2022, to $59 billion by 2030, (1)” Mr Fitzgibbon said.

Mr Fitzgibbon said Plan Management as well as Support Coordination are crucial elements in the NDIS. Both constitute an independent middle layer between participants and the providers of disability services that help participants design their plans and procure services. Plan Management is an increasingly popular option with more than half of all NDIS participants.

“We believe we can contribute to the success of the NDIS and improve outcomes for participants,” he said. “There is an alignment between supporting NDIS participants and our 70-year history as a private health insurer. As a health insurer, we’ve essentially played the role of designing health cover to suit members’ needs and then connected them with the healthcare system,” he said.

Mr Fitzgibbon said the NDIS and organisations such as Maple Plan have done a fantastic job to date in supporting participants.
“However, there is opportunity for further development and nib has many relevant capabilities.

“nib has modern technologies that we hope will provide participants and Support Coordinators with even deeper insight into how participants might achieve their goals. We have long experience in procuring services, contracting with service providers and quality assurance. We have rapidly evolving digital tools to facilitate participant support and engagement. We sense the potential to better integrate healthcare with disability services. We are very focused upon measuring and improving outcomes. And nib is a trusted brand,” he said.

The acquisition of Maple Plan is not material to nib’s earnings per share. It will be accretive from the first full year of ownership for the allocated capital deployed (2). The acquisition is expected to be completed by mid-November.

Mr Fitzgibbon said the acquisition forms a solid foundation for further organic and inorganic growth. nib is targeting at least 50,000 participants by 2025 and has established a specialist team to expand its Plan Management footprint led by Martin Adlington. Mr Adlington, a member of nib’s executive management team, led the acquisition and integration of GU Health and most recently was Group Chief People Officer. He will continue to report directly to Mr Fitzgibbon.

About Maple Plan

Maple Plan is one of around 1,200 known NDIS Plan Managers and is the seventh largest with about 7,000 participants and revenue of approximately $10.4 million in FY22. Present owners Andrian Putra and Vincent Lay founded Maple Plan in 2018. It currently employs around 60 people and is based in Melbourne, Victoria.

Mr Putra believes nib will fit well with Maple Plan. “nib has an impressive reputation in the private healthcare sector. It has a firm commitment to scalable technology, helping participants with real-time budgeting and connecting them to greater choice. This gives us confidence nib will deliver good results for participants,” he said.

For more information read the full ASX announcement . 

(1) National Disability Insurance Scheme: Annual Financial Sustainability Report 2020-21
(2)Excludes one-off transaction and IT costs. Based on ~70% equity / ~30% debt funding for the allocated capital amount deployed.