Sunday 25 October 2009

Maxis May Raise Up to 12.4 Billion Ringgit in IPO

Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.

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Maxis May Raise Up to 12.4 Billion Ringgit in IPO (Update2)

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By Soraya Permatasari

Oct. 23 (Bloomberg) -- Maxis Communications Bhd., Malaysia’s biggest mobile-phone operator, may raise as much as 12.4 billion ringgit ($3.7 billion) in the country’s largest initial share sale, according to an e-mail sent to investors.

The Kuala Lumpur-based phone operator’s shareholders will sell as many as 2.25 billion shares at 4.8 ringgit to 5.5 ringgit apiece next month, lead arranger CIMB Investment Bank Bhd. said in the e-mail. That would value the company as much as 41.25 billion ringgit.

The sale, more than double Petronas Gas Bhd.’s record 1995 offering, would give billionaire Ananda Krishnan funds to invest in faster-growing markets as wireless demand slows at home, where mobile subscriptions exceed the nation’s population of 28 million. The shares are being offered as equity markets from Malaysia to China to India climb back to levels preceding the bankruptcy of Lehman Brothers Holdings Inc.

“As it will likely be added into the benchmark index, fund managers would have no choice but to look at Maxis and to add it into their portfolio,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. “It will help boost the market in terms of the depth, being such a big cap stock.”

Institutional Investors

The indicative price range values the stock at 16 to 18 times estimated earnings, making Maxis expensive relative to rivals such as Digi.com Bhd, according to Scott Lim, chief executive officer of MIDF Amanah Asset Management Bhd. in Kuala Lumpur. Stocks on the MSCI Asia Pacific Telecommunication Services Index trade an average of 13 times estimated earnings.

“The offer is also a bit pricey compared with regional valuations,” Lim said. “Foreign fund managers may not be interested and they would rather buy a similar stock somewhere else.”

The stock will be priced on Nov. 10 and start trading on the Malaysian exchange Nov. 19, according to the e-mail.

About 2 billion shares, or 91 percent of the total, are being offered to institutional investors, while about 150 million, or 6.7 percent of the total, will be sold to the public, according to the e-mail. Maxis will start marketing today in Hong Kong, followed by Singapore on Oct. 26 and Oct. 27, and Kuala Lumpur from Oct. 28 to Oct. 30, it said.

Europe, U.S. Presentation

Presentations of the sale in Europe and the U.S. will be from Nov. 2 to Nov. 9. Malaysia’s biggest funds, including the Employees Provident Fund, may take up almost half of the stock offering, a person with knowledge of the matter, told Bloomberg this week.

Lembaga Tabung Haji, which manages about 23 billion ringgit of Islamic pilgrim funds in Malaysia, is considering the offer as long as the price doesn’t exceed 5.20 ringgit a share, Chief Investment Officer Mohd Noor Abdul Rahman said yesterday.

The phone carrier will only include local operations in the sale, potentially discouraging foreign investors because Maxis already controls 40 percent of the Malaysian market, in which handsets outnumber people.

Maxis was among the country’s four biggest companies by market value before billionaire Krishnan, 71, took it private in 2007 in a 16 billion ringgit transaction.

Mobile-phone penetration in Malaysia exceeded 100 percent in March, according to the Malaysian Communications and Multimedia Commission.

Mobile Subscribers

Maxis had 11.4 million mobile-phone subscribers as of June 30, according to the initial prospectus. The company reported 4.24 billion ringgit of revenue in the six months to June 30.

Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.

Krishnan is Malaysia’s second-richest person, with an estimated $7 billion of wealth, according to Forbes magazine.

Krishnan, whose family originated from Sri Lanka, was born April 1, 1938 in Brickfields, Kuala Lumpur. He also owns Astro All Asia Networks Plc, Malaysia’s biggest pay television operator, which this month secured a three-year agreement with the FA Premier League for exclusive rights to broadcast Barclays Premier League football matches in the country.

Krishnan took Maxis private in 2007 in a 16 billion ringgit buyout deal in a bid to accelerate expansion in India, where it owns Aircel Ltd., and in Indonesia, hoping to seek growth outside the maturing Malaysian market. He promised to re-list Maxis in there years.

The decision to re-list Maxis this year came after Prime Minister Najib Razak in July said Maxis should re-list to attract investors to the Malaysian stock exchange.

To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net

Last Updated: October 23, 2009 02:42 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=aifzm6xbxmlA

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