With the blessings of the prime minister himself, the relisting of Malaysia’s top telecom firm Maxis Bhd next month was destined to be a blockbuster, but tepid response from domestic funds so far suggests otherwise. Reclusive Malaysian billionaire Ananda Krishnan took Maxis private two years ago in a deal that valued the company at about RM40 billion (US$11.78 billion). Maxis, which also owns telco assets in India and Indonesia, was once one of the most widely owned stocks by foreign investors in Malaysia.
Prime Minister Datuk Seri Najib Razak, who wants to boost the country’s sluggish stock market, had asked Ananda to relist Maxis, a call that was heeded, but only in part, because Ananda plans to float just the Malaysian operations in the IPO. Some fund managers have said they will likely underweight Maxis, whose listing is expected to squeeze a few stocks out of the benchmark stock index due to its size, as valuations seem lofty and growth prospects uninspiring. “You really have to struggle to find where is growth going to come from,” said Abdul Jalil Rasheed, who helps manage about US$2 billion at the Malaysian unit of Aberdeen Asset Management. "This is just the Malaysian business, not the fast growing Indian or Indonesian business.”
The Indian and Indonesian businesses were together valued at around RM7 billion when Ananda took the company private two years ago, but analysts feel the current IPO risks overvaluing the mature Malaysian arm by excluding the lucrative overseas operations. Sources have said Ananda and his partner, Saudi Telecom, are looking to cash in more than US$2 billion through the IPO, making it Southeast Asia’s biggest since 1995. An indicative price could be announced this week, while CIMB Research said the company could be valued at US$11-US$12 billion. “Maxis could be looking to raise around US$2.5 billion from this,” a source familiar with the deal said. Alibaba.com - Fast & easy sourcing right from your computer
Maxis, controlled by Ananda, Saudi Telecom and some domestic trust funds via unlisted Binariang GSM, will sell 2.25 billion shares, or 30 per cent, of its existing share capital in the IPO.
BANKERS GALORE
Given the mega size of the offering, every bank is salivating for a slice of the pie. Maxis has hired CIMB, Credit Suisse and Goldman Sachs N$> as joint-bookrunners for the IP0. UBS, JPMorgan and Nomura are co-bookrunners and CLSA, Bank of America’s Merrill Lynch, HSBC and Standard Chartered are among the co-lead managers, sources said. Institutional bookbuilding for the IPO is expected to take place by November 9 and the listing by November 16.
But at a fund manager briefing by CIMB in Kuala Lumpur last week, investors questioned why Maxis, stripped of its prized assets in India and Indonesia, deserved to be valued at the figure of two years ago. Malaysia is a fully saturated market in terms of SIM penetration. “People have talked about 14 to 16 times (price to earnings ratio),” said Aberdeen’s Jalil. “I think at the lower end of the range it does look OK but if it’s in a late teen or something, it might put off certain people.” Rival Axiata, a regional player with a presence in Indonesia, India and Sri Lanka, currently trades at 15.9 times 2010 earnings, Thomson Reuters data showed. DiGi, the smallest mobile player in the country, with no regional presence, trades at 14.9 times.
These ratios compared to the 11.7 times fetched by Singapore Telecom, which also operates in a fully saturated market with some regional presence. Maxis, which earned RM1.14 billion in the first half of 2009, said it plans to pay out 75 per cent of its net profit as dividend. CIMB Research said Maxis had a dividend yield of between 5.3 per cent and 5.9 per cent in 2010, compared to the 4.6 per cent yield of the FTSE Bursa Malaysia KLCI. But investors were not impressed. “If I want to buy for yields, I may as well buy a bond, that way I am not subjected to the ups and downs in the market,” said the CIO of a fund management firm. -- Reuters
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