Published October 29, 2009

Maxis goes for broke with huge offering

M'sia's biggest-ever IPO may raise up to RM11.6b when shares list in Nov

By S JAYASANKARAN
IN KUALA LUMPUR

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MALAYSIAN telecommunications firm Maxis is offering 2.25 billion shares to institutional and retail investors in a bid that could conceivably raise RM11.6 billion (S$4.7 billion) when the firm lists its shares on the Malaysian bourse on Nov 19.

Mr Das: Market is mature but not saturated. Maxis's growth will come from data, broadband services

The details were revealed after the firm released its prospectus in a glittering, multi-media presentation in Kuala Lumpur yesterday. The initial public offer from Maxis, which was privatised in 2007, is the largest in Malaysian corporate history and the largest in South-east Asia. Incidentally, the largest float on the Kuala Lumpur stock exchange previously was also Maxis (RM3.2 billion) when it was first listed in 2003.

The precise amount that the IPO will raise isn't clear as there is a book building exercise now underway at indicative prices ranging from RM4.80 to RM5.50. However, Nazir Razak, the chief executive of CIMB, the lead investment bank, said yesterday that four institutions had locked-in more than 20 per cent of the firm at RM5.20 a share.

The four: the Employees Provident Fund, the state-owned Pension Trust, Permodalan Nasional Berhad, and Fidelity. Mr Nazir indicated that retail investors would get their shares at a 5 per cent discount to the institutional investors.

The run-up to the IPO has been relatively seamless and one of the quickest in Malaysian corporate history. One reason: it came about after Prime Minister Najib Razak himself asked for it on the grounds that it would add breadth and liquidity to the Malaysian bourse.

Analysts agree, a sentiment that was echoed by Mr Nazir yesterday. Indeed, the float is likely to attract keen interest because of the stock's potential yield. The prospectus promised that the firm would return at least 75 per cent of net profit to shareholders or some 25 sen a share. But according to bankers, potential institutional investors have been told that the firm would upsize that to 50 sen a share.

At RM5.20 a share that translates to a dividend yield of 10 per cent, one of the highest in the business. 'They need to drum up interest in their IPO but I concede they could easily do it given their cash flows,' one foreign analyst told BT. 'But can they sustain it, post listing?'

It's debatable. Maxis contains the Malaysian operations of Maxis Communications (MCB) which has operations in the fast growing markets of Indonesia and India. Meanwhile, analysts argue that the Malaysian telecommunications market is saturated.

'It's mature but it's not saturated,' Maxis chief executive Sandip Das told the press yesterday. He insisted that the new growth would come from Malaysia's demographics (a relatively young population), data and broadband services.

For the year to December 2008, the firm made a net profit of RM2.4 billion although this included its international operations so it's not really an indicative figure. However, analysts said that growth in 2009 should be around 12 per cent.

Maxis will be owned 70 per cent by MCB after listing. MCB itself is 75 per cent owned by the family and allies of Malaysian billionaire T Ananda Krishnan while Saudi Telecom owns the remainder.

The low-profile tycoon, who was not present at the ceremony yesterday, took Maxis private in 2007 for US$4.7 billion and sold the 25 per cent to the Saudi firm two months later for US$3 billion.