Published November 11, 2009

Maxis valued at RM37.5b ahead of IPO

That will make telco Malaysia's fourth largest company by market cap

By S JAYASANKARAN
IN KUALA LUMPUR

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MALAYSIA'S, and the region's, largest initial public offering gathered traction yesterday after a book building exercise valued Maxis, the country's largest telco, at RM37.5 billion (S$15.4 billion) with an enterprise value of RM42.5 billion.

Leading the pack: This will be the largest listing in Malaysian, and Asean, history. It will also be the largest telecom offering in the Asia-Pacific region since 2000.

At the close of the exercise yesterday, institutional investors paid RM5 a share while retail investors will pay RM4.75, netting RM11.2 billion for Maxis.

The result will be the fourth largest company by market capitalisation on the Malaysian stock exchange.

The telco offered 2.25 billion shares to investors, representing 30 per cent of the shares sold by its parent, Maxis Communications. The latter is majority controlled by tycoon T Ananda Krishnan while Saudi Telecom owns 25 per cent.

The listing will register a number of firsts. This will be the largest listing in Malaysian, and Asean, history. It will also be the largest telecommunications offering in the Asia-Pacific region since 2000.

Mr Krishnan's timing could not have been better. His IPO comes at a time when the US and Asian stock markets are at year-highs and, indeed, Maxis leads several big Asian names going to market.

Together with China's Minsheng Banking Corp and casino firm Sands China Ltd, Malaysia's largest telco is expected to lead more than US$10 billion in share sales in Asia.

In fact, analysts expect more than 30 companies planning to list in either Hong Kong or India over the next few months to take advantage of the vastly bullish markets worldwide.

The IPO from Maxis is expected to be followed by a US$2 billion listing of CapitaLand's shopping mall trust in Singapore later this month as issuers tap into investor demand ahead of 2010 which is expected to be economically more uncertain

Maxis's listing comes just two years after the company was taken private by Mr Krishnan, who owns power, gaming, entertainment and media assets in Malaysia and elsewhere.

The billionaire is said to be Malaysia's second richest individual - after magnate Robert Kuok - with a net worth estimated by Forbes magazine at US$7 billion.

Maxis's valuation at about 16 times 2009 earnings is the highest among Malaysian telecommunication firms. DiGi.com trades at a price-to-earnings multiple of 14-15 times 2009 earnings while Axiata, which is owned by Telecom Malaysia with regional growth exposure, trades at 13-14 times.

But analysts said that Maxis's first-year dividend, at least, could hit a 10 per cent yield which was why it was snapped up the way it was.

Whether the company can sustain that initial trend is the question although its initial promise - that of a 75 per cent payout of earnings - would still result in a 5-6 per cent yield.

Still, the newly minted Maxis is a stripped down version of the original as it will house just the Malaysian business, leaving the fast-growing Indian and Indonesian operations with its unlisted parent, Maxis Communications Bhd.