Foreigners said to find Maxis too good to pass up
Written by Cindy Yeap
Tuesday, 10 November 2009 12:06
KUALA LUMPUR: The final retail and institutional prices for Maxis Bhd’s share offering — the country’s largest-ever IPO — are expected to be known by midday today, and indications are the company is set to return the RM39 billion market capitalisation it took away from the local bourse when it went private in July 2007.
“Speculation is that bookrunners received good orders from foreign institutions at the last minute,” a local fund manager told The Edge Financial Daily yesterday.
News that the indicative “floor” price for Maxis has gone up to RM5 from RM4.80 after its shares were oversubscribed “leaked” on Bloomberg newswires yesterday morning, less than 24 hours before books for the institutional tranche were due to close.
The indicative pricing range for Maxis is now between RM5 and RM5.50, up from RM4.80-RM5.50 previously, Bloomberg reported, citing an email to institutional investors from CIMB Investment Bank, the IPO’s lead adviser, joint global coordinator and bookrunner.
The price range indicates that reclusive tycoon T Ananda Krishnan and his partner Saudi Telecom Co Ltd are set to raise between RM11.25 billion and RM12.38 billion from selling 2.25 billion shares or 30% of the unit that houses Maxis Communications Bhd’s operations in Malaysia.
Every 10 sen difference in the final institutional price translates to a RM224 million change in gross proceeds for the sellers, back-of-the-envelope calculations show.
“The institutional portion is definitely oversubscribed by more than two times for a price above RM5,” Reuters quoted an unnamed banking source as saying yesterday.
Maxis needs to be priced at RM5.20 apiece to get a market capitalisation of RM39 billion, the amount that disappeared from Bursa Malaysia when “the old Maxis” was taken private 28 months ago.
Maxis is set to boost Bursa Malaysia’s total market capitalisation by over 4% and a RM39 billion market capitalisation would make it the fifth largest company after SIME DARBY BHD [], MALAYAN BANKING BHD [], CIMB Group Holdings Bhd and PUBLIC BANK BHD [], going by yesterday’s closing prices.
Incidentally, RM5.20 is the ceiling price agreed to by four cornerstone investors — the Employees Provident Fund Board, Fidelity Funds-Malaysia Fund, Kumpulan Wang Persaraan (Diperbadankan) and Permodalan Nasional Bhd — for 626.08 million shares or 27.8% of the offer shares, which they would hold for at least six months. They will pay the final institutional price for Maxis, should that be fixed below RM5.20 apiece.
Lembaga Tabung Haji chief investment officer Mohd Noor Abdul Rahman had reportedly said on Oct 22 that the pilgrim’s fund would not pay more than RM5.20 apiece for Maxis, which is now faced with a tougher environment than when “the old Maxis” made its debut in July 2002.
The retail portion will be priced at a 5% discount to the institutional price, which is RM4.94 apiece if the institutional price is fixed at RM5.20. At these prices, Maxis’ owners will raise RM11.6 billion cash, making it the country’s largest IPO, unseating “the old Maxis” which raised RM3.1 billion.
The final institutional price is expected after Monday’s closing bell on Wall Street, or about 5.15am today in Kuala Lumpur.
For domestic investors, dividend yield would be the “primary consideration” when looking at Maxis, and “Maxis has strong cashflows”, HwangDBS Investment Management chief investment officer David Ng said.
“Based on the guidance of 75% payout, yield is about 5%… but (in pricing Maxis) we also take into consideration that Maxis has the ability to raise dividend payouts (above guidance),” Ng said. He declined to comment on whether his house bid more than RM5.20 apiece for Maxis.
OSK Investment Bank Bhd director and head of equity capital markets Gan Kim Khoon was more upbeat when asked if his fund would pay more than RM5.20 a share for Maxis.
“Based on our fair value of RM5.30 to RM5.80 (for Maxis), the short answer is yes… Maxis deserves a premium for its market leadership position and the quality of its earnings and customer base,” he said.
“The brand itself carries a premium and it has strong cashflows. There is still growth for Maxis in the East Coast and East Malaysia where mobile penetration is still below the national average and we should not underestimate the potential for mobile data,” Gan added, without committing to whether OSK’s bid was above RM5.20 apiece.
Maxis commands 40% of the mobile phone services market, ahead of rivals Celcom (M) Bhd and DIGI.COM BHD [].
Maxis group CEO Sandip Das said Malaysia’s demographics — where population is growing at a healthy 2% a year and some 50% of the population are below the age of 25 — show there is ample growth potential in the local market, despite mobile phone penetration already exceeding 100%.
“We are a mature market, but not necessarily a saturated market… there is also tremendous potential in data and broadband,” Sandip had said after Maxis’ prospectus launch on Oct 28.
In a note dated Oct 29, OSK Investment Research regional telecoms analyst Jeffrey Tan estimated that Maxis would be trading at between 14.8 times and 16.2 times FY2010 earnings at the indicative valuation of RM5.30 to RM5.80 for the market leader.
The higher range of OSK’s fair value of RM5.80 implies a 11.5% potential upside to the indicated IPO price of RM5.20.
Maxis targets to list on the Main Market on Nov 19.
Written by Cindy Yeap
Tuesday, 10 November 2009 12:06
KUALA LUMPUR: The final retail and institutional prices for Maxis Bhd’s share offering — the country’s largest-ever IPO — are expected to be known by midday today, and indications are the company is set to return the RM39 billion market capitalisation it took away from the local bourse when it went private in July 2007.
“Speculation is that bookrunners received good orders from foreign institutions at the last minute,” a local fund manager told The Edge Financial Daily yesterday.
News that the indicative “floor” price for Maxis has gone up to RM5 from RM4.80 after its shares were oversubscribed “leaked” on Bloomberg newswires yesterday morning, less than 24 hours before books for the institutional tranche were due to close.
The indicative pricing range for Maxis is now between RM5 and RM5.50, up from RM4.80-RM5.50 previously, Bloomberg reported, citing an email to institutional investors from CIMB Investment Bank, the IPO’s lead adviser, joint global coordinator and bookrunner.
The price range indicates that reclusive tycoon T Ananda Krishnan and his partner Saudi Telecom Co Ltd are set to raise between RM11.25 billion and RM12.38 billion from selling 2.25 billion shares or 30% of the unit that houses Maxis Communications Bhd’s operations in Malaysia.
Every 10 sen difference in the final institutional price translates to a RM224 million change in gross proceeds for the sellers, back-of-the-envelope calculations show.
“The institutional portion is definitely oversubscribed by more than two times for a price above RM5,” Reuters quoted an unnamed banking source as saying yesterday.
Maxis needs to be priced at RM5.20 apiece to get a market capitalisation of RM39 billion, the amount that disappeared from Bursa Malaysia when “the old Maxis” was taken private 28 months ago.
Maxis is set to boost Bursa Malaysia’s total market capitalisation by over 4% and a RM39 billion market capitalisation would make it the fifth largest company after SIME DARBY BHD [], MALAYAN BANKING BHD [], CIMB Group Holdings Bhd and PUBLIC BANK BHD [], going by yesterday’s closing prices.
Incidentally, RM5.20 is the ceiling price agreed to by four cornerstone investors — the Employees Provident Fund Board, Fidelity Funds-Malaysia Fund, Kumpulan Wang Persaraan (Diperbadankan) and Permodalan Nasional Bhd — for 626.08 million shares or 27.8% of the offer shares, which they would hold for at least six months. They will pay the final institutional price for Maxis, should that be fixed below RM5.20 apiece.
Lembaga Tabung Haji chief investment officer Mohd Noor Abdul Rahman had reportedly said on Oct 22 that the pilgrim’s fund would not pay more than RM5.20 apiece for Maxis, which is now faced with a tougher environment than when “the old Maxis” made its debut in July 2002.
The retail portion will be priced at a 5% discount to the institutional price, which is RM4.94 apiece if the institutional price is fixed at RM5.20. At these prices, Maxis’ owners will raise RM11.6 billion cash, making it the country’s largest IPO, unseating “the old Maxis” which raised RM3.1 billion.
The final institutional price is expected after Monday’s closing bell on Wall Street, or about 5.15am today in Kuala Lumpur.
For domestic investors, dividend yield would be the “primary consideration” when looking at Maxis, and “Maxis has strong cashflows”, HwangDBS Investment Management chief investment officer David Ng said.
“Based on the guidance of 75% payout, yield is about 5%… but (in pricing Maxis) we also take into consideration that Maxis has the ability to raise dividend payouts (above guidance),” Ng said. He declined to comment on whether his house bid more than RM5.20 apiece for Maxis.
OSK Investment Bank Bhd director and head of equity capital markets Gan Kim Khoon was more upbeat when asked if his fund would pay more than RM5.20 a share for Maxis.
“Based on our fair value of RM5.30 to RM5.80 (for Maxis), the short answer is yes… Maxis deserves a premium for its market leadership position and the quality of its earnings and customer base,” he said.
“The brand itself carries a premium and it has strong cashflows. There is still growth for Maxis in the East Coast and East Malaysia where mobile penetration is still below the national average and we should not underestimate the potential for mobile data,” Gan added, without committing to whether OSK’s bid was above RM5.20 apiece.
Maxis commands 40% of the mobile phone services market, ahead of rivals Celcom (M) Bhd and DIGI.COM BHD [].
Maxis group CEO Sandip Das said Malaysia’s demographics — where population is growing at a healthy 2% a year and some 50% of the population are below the age of 25 — show there is ample growth potential in the local market, despite mobile phone penetration already exceeding 100%.
“We are a mature market, but not necessarily a saturated market… there is also tremendous potential in data and broadband,” Sandip had said after Maxis’ prospectus launch on Oct 28.
In a note dated Oct 29, OSK Investment Research regional telecoms analyst Jeffrey Tan estimated that Maxis would be trading at between 14.8 times and 16.2 times FY2010 earnings at the indicative valuation of RM5.30 to RM5.80 for the market leader.
The higher range of OSK’s fair value of RM5.80 implies a 11.5% potential upside to the indicated IPO price of RM5.20.
Maxis targets to list on the Main Market on Nov 19.
