By Patricia Kuo, Bloomberg
Hong Kong: T. Ananda Krishnan, Malaysia’s second- richest man, plans to borrow about $7 billion (Rs 28,728 crore) to fund his buyout of Maxis Communications Bhd., the nation’s biggest mobile phone company.
Sources close to Krishnan said ABN Amro Holding is in talks to arrange the financing. The debt would be backed by revenue at Kuala Lumpur-based Maxis.
Krishnan follows the richest individuals in Australia and New Zealand in taking full control of his main company using tactics more commonly deployed by buyout firms. Taking Maxis private would give Krishnan cash to drive expansion in faster-growing markets such as India.
“There are some benefits for owners to take their investments private, including not having to deal with shareholders,” said Hugh Young, Singapore-based managing director at Aberdeen Asset Management Asia Ltd., which manages $35 billion in the region, including Maxis shares. “I expect to see more and more of these deals coming.”
Harvard Business School graduate Krishnan, 69, is seeking the loan for one year to fund his purchase of a 54% stake in Maxis, said the people. The stake is valued at $5.1 billion as of 27 April. He will also refinance Maxis’s debt and boost working capital at the company, the people said. The loans will be replaced within a year by medium- to long-term senior loans and high-yield debt, they said.
Amsterdam-based ABN Amro previously arranged Maxis’s 2002 initial public offering, which raised $890 million.
Private-equity firms typically borrow against a company’s assets to finance takeovers, enabling them to take on bigger targets and limit the amount of equity they put at risk.
Maxis had earnings before interest, taxes, depreciation and amortization that were more than 19 times the cost of servicing its debt, according to data compiled by Bloomberg.
Krishnan’s proposed buyout comes less than three months after Vodafone Group Plc agreed to buy 67% of Hutchison Essar Ltd., valuing the Indian mobile-phone company at $18.8 billion, or 30 times its 2006 ebitda of $626 million.
Maxis had ebitda of 3.85 billion ringgit ($1.12 billion) last year. A similar valuation to Essar would make Maxis a $33 billion company.
Maxis said last month it plans to spend $3 billion in the next five years expanding its network in India to counter slowing growth at home. The company’s Indian unit, Aircel Ltd., generated 13 % of fourth-quarter sales.
More than 70% of Malaysia’s 27 million people own mobile phones, compared with about 10% in India. Aircel said in February it expects to almost double its subscribers to 8 million this year in India.