The Federal Government has lifted the indicative price for Medibank shares to between $2 and $2.30.

The original indicative price range was $1.55 to $2 per share, but this was always subject to change depending on demand for the float.

The Government said in a short statement that “very strong demand” from both domestic and offshore institutional investors had caused it to raise the indicative price range.

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However, the Government said this will not alter the $2 price cap set for retail investors (those buying up to $250,000 worth individually).

Although this rise in the overall indicative price is a strong indication that retail investors will be paying the maximum $2 per share, rather than a lower price.

At the launch of the float, some analysts questioned whether the IPO was good value for smaller shareholders if priced at the top of the original $1.55 to $2 range.

Retail and institutional investors also have to wait until Tuesday November 25 to find out how many shares they will receive.

Investors seem highly unlikely to get all the shares they asked for given how oversubscribed the broker offer was, and now the apparent strong demand from financial institutions.

The Government said no decisions have yet been made on the split of shares between small, individual investors and financial institutions.

A $2.30 a share price would value Medibank at $6.3 billion, but the Government would actually receive less than this depending on how many shares went to retail investors on the $2 capped price.