Published October 22, 2009

M'sian funds to buy half of Maxis IPO

The US$3b IPO, likely to be priced at RM5-5.50 a share, will be on sale on Oct 23

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(KUALA LUMPUR) Malaysian funds will buy almost half the nearly US$3 billion of stock Maxis Communications Bhd is selling in the country's biggest initial public offering, a person with knowledge of the matter said.

Local investors that will buy shares of Malaysia's largest mobile-phone carrier include the nation's biggest pension fund, the Employees Provident Fund, the person said, declining to be identified.

Maxis, run by billionaire T Ananda Krishnan, will start marketing the sale on Oct 23, the person said.

Maxis's IPO will raise more than double the previous record in Malaysia, set by Petronas Gas Bhd's offering in 1995.

The company will only include its local operations in the sale, potentially discouraging foreign investors as Maxis already controls 40 per cent of the Malaysian market, where handsets outnumber people.

'Because of its size, any Malaysian-centric or Malaysian index-linked funds will have to take up the offer,' said Jeffrey Tan, an analyst at Kuala Lumpur-based OSK Research Sdn.

'The challenge is to get foreign funds to come in. It might be difficult to convince them because the Malaysian mobile market is already very saturated and the company is excluding its overseas operations.'

Maxis was among the country's four biggest companies by market capitalisation before Krishnan, 71, took it private in 2007 in a RM16 billion (S$6.61 billion) transaction.

The Kuala Lumpur-based company, which has operations in India and Indonesia, aims to complete the offering by mid-November, the person said.

Krishnan may use the proceeds to pay off some of the 'huge' debt that Maxis piled up to expand its operations in India and Indonesia, said Mr Tan.

He recommends investors to subscribe to the IPO, assuming an offer price of between RM5 and RM5.50 a share.

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

Azlan Zainol, chief executive officer of the Employees Provident Fund, declined to comment in an e-mail to Bloomberg News.

Catherine Leong, a Maxis spokeswoman, also declined to comment.

Maxis plans to sell as many as 2.25 billion shares in the offering, it said in a draft prospectus published last month, without disclosing how much money would be raised.

The Kuala Lumpur-based company will reserve 174.8 million shares for the public and customers, with the rest going to institutional investors and indigenous ethnic groups, the company said.

CIMB Investment Bank Bhd. is the principal adviser for the offering while Credit Suisse Group AG and Goldman Sachs Group Inc. are joint global coordinators and book-runners.

Maxis had 11.4 million mobile-phone subscribers as of June 30, giving it a 40 per cent market share in Malaysia, according to the initial prospectus.

The company reported RM4.24 billion of revenue in the six months to June 30.

Maxis first sold shares in Malaysia in 2002.

Before the company was taken private in June 2007, it was valued at about RM40 billion on the Malaysian stock exchange. -- Bloomberg