Malaysia’s Maxis to return to bourse with $3.43 bn IPO

Malaysia’s Maxis to return to bourse with $3.43 bn IPO

Kuala Lumpur: Malaysia’s top mobile operator, Maxis, is tipped to receive a warm welcome back to the bourse this month in an initial public offering (IPO) worth around $3.43 billion (Rs16,121 crore), billed as the biggest in South-East Asian history.

Maxis, controlled by reclusive Malaysian tycoon Ananda Krishnan and Saudi Telecom, is launching the IPO on Bursa Malaysia two years after it was taken private and delisted.

It is offering 2.25 billion, or 30%, of its shares at an indicative price of 5.20 ringgit ($1.52) which would raise 11.7 billion ringgit. Most of the shares will go to institutional investors.

Parent firm Maxis Communications Bhd is expected to deploy the proceeds of the sale, slated for 19 November, on funding expansion in the booming Indian and Indonesian markets, and to reduce debt.

Economic pundits are upbeat about the listing despite the uncertain global economic outlook that has soured other recent share offerings in the region, but warn that the market remained unpredictable.

Yeah Kim Leng, chief economist with ratings agency RAM Holdings, said that Maxis’ dominant position in the domestic telecom industry had triggered an early rush to collect application forms.

“Investors can smile. The listing is likely to be successful," he said, but said there were unlikely to be any hefty immediate profits. “The market is very volatile. It is not a sure bet. But the sentiment is strong for Maxis."

The listing includes only Maxis’ Malaysian mobile business and excludes its ventures in India and Indonesia which remain under Maxis Communications, the unlisted parent company.

Alliance Research said Maxis remains the leading mobile operator in Malaysia in both the prepaid and post-paid segments with some 11.4 million subscriptions as at the end of the first half of 2009.

Its post-paid segment commands a thumping 46.4% of the local market share, but Alliance said the business had “limited growth prospects, without overseas operations".

“The new listed entity will be without its overseas operations which could offer robust growth potential going forward. Investors are left with domestic operations, in which mobile business faces limited growth," it said.

Nazir Razak, group chief executive of CIMB Group, which is the principal adviser for the listing exercise, has said the IPO will be the biggest in South-East Asian history.

He has defended the firm’s growth prospects, saying there is still plenty of potential for the group’s broadband and data segments in Malaysia and that SIM card penetration is also predicted to grow.