Written by Cindy Yeap
Friday, 20 November 2009 12:26
KUALA LUMPUR: Local institutional investors were at no point disadvantaged compared to foreign institutions in Maxis Bhd’s book building process, the IPO’s principal adviser said.
“Local institutions were treated in the pool the same way as foreign institutions. In that process, we assessed for quality, how firm the bid was, how aggressive and the speed it came in.
“From that whole process, some people are going to get a high allocation and some low and that’s normal. I don’t see why people should turn down their allocation, but if by that someone else gets more shares, then someone else is happy,” CIMB group chief executive Datuk Seri Nazir Razak told reporters after witnessing Maxis’ re-debut on the Main Market here yesterday.
“In terms of the ultimate allocation, sure there are disappointments, and I think this is also a reflection of the quality of Maxis. It’s good that people really want these shares, unfortunately there is a limited amount and some people who wanted it couldn’t get it or some people who wanted it couldn’t get enough.
“I have no idea why some people can be so rich that they would turn down the shares that they wanted in the first place,” he added.
OSK Investment Bank Bhd (OSK IB) was not the only local institution that was unhappy with the size of its allocation of Maxis IPO shares but “to the best of (his) knowledge”, it was the only one that turned down its allocation, Nazir said.
Nazir. Photo by Mohd Izwan Mohd Nazam
The Edge Financial Daily reported on Tuesday that OSK IB had rejected its entire allocation of 1.5 million shares, describing it as “simply not meaningful” as it would result in its clients being allocated too few shares to justify transaction costs.
Some local investors, including Kenanga Investment Bank Bhd’s senior director (equities) James Lau, had reportedly hoped for greater transparency in the share allocation process to help allay some of the disappointments on the small allocations.
However, Nazir declined to disclose the exact number of shares that was given to local institutions, who were neither cornerstone investors nor Miti-approved investors.
He said the “flexibilities” built into the allotment process had helped bookrunners get a good balance of shareholders as well as achieve the IPO’s “unwritten” objective of having 30% of the offer shares going to quality foreign institutional investors.
“That was good for the company and good for the country. For Malaysia, this IPO bought back high quality institutional investors for the first time, or those who left some time ago, and that’s a tremendous achievement,” he said.
Moreover, it is “not easy” to clearly define whether an institution like Nomura or Aberdeen, for instance, was local or foreign, he added.
“What’s clear is bumiputera shareholding is 34%, with 21% coming from existing shareholders and the balance from the IPO process. That’s way ahead of regulatory requirement. So broadly speaking, about 30% went to foreign institutions. We are not in the position to disclose the names or the exact holding of any institution,” Nazir said.
In its IPO prospectus, Maxis said 2.037 billion shares (27.17% of Maxis’ share base) were for institutions, of which 626.08 million shares were for the IPO’s four cornerstone investors.
Miti-approved bumiputera investors’ portion was 862.5 million shares, but Nazir confirmed yesterday that the shares in the bumiputera-Miti allocation may also include a portion of shares set aside for the cornerstone investors, but declined specifics.
This article appeared in The Edge Financial Daily, November 20, 2009.
