Maximizing Maxis?

Yeoh Pooi Ling reporting in The STAR today recorded some analysts as saying that the final price at RM4.75 of the IPO is below expectation.

Maxis Bhd has now set the price of its initial public offering (IPO) shares at RM4.75 each while institutional and cornerstone tranches are at RM5 per share, which will collectively raise about RM11.2bil from the listing of 2.25 billion shares on Bursa Malaysia.

The market capitalisation at the institutional price and its enterprise value would amount to RM37.5bil and RM42.5bil respectively, said Maxis after the close of its book-building exercise yesterday.

The institutional offering book, excluding the offering to cornerstone investors and approved bumiputera investors, was 3.7 times covered or equivalent to RM19.3bil, comprising some 500 global investors.


The IPO attracted orders of over RM26.5bil via its various tranches, with strong demand from international and Malaysian investors.

Foreign interest came from leading institutional investors familiar with Malaysia, 10 institutional investors new to Malaysia with orders of RM1.3bil in Maxis shares, as well as sovereign wealth funds, it said.

The institutional offering will raise RM5.3bil, of which over US$800mil will be from foreign investors. The bumiputra investors and cornerstone tranches attracted RM5.2bil for one billion shares.

Cornerstone investors have agreed to hold their shares for six months from the listing date and would in return obtain a preferential allocation for the IPO.

These investors include the Employees Provident Fund, Fidelity Funds-Malaysia Fund, Kumpulan Wang Persaraan (Diperbadankan) and Permodalan Nasional Bhd.

The retail offering of 212.3 million shares was oversubscribed by 180% for 381.2 million shares worth RM2bil.

UOB Kay Hian (M) Holdings Sdn Bhd head of research Vincent Khoo said the final prices were below expectation, as “it was widely expected that the institutional price would be at RM5.20 per share.”

“At RM5 per share, there is a modest upside upon listing as most estimated valuations would not be more than RM5.50,” he told StarBiz.

OSK Investment Bank, in a report, said the final price, at the lower end of the indicative range of RM4.80 to RM5.50, was a reflection of the valuation appetite among institutions for the stock.

“Maxis should have no issue meeting its dividend obligations.” the research house said.

Maxis, upon its listing on Nov 19, would become a component of the FTSE Bursa Malaysia KL Composite Index and increase the capitalisation of the market by over 4%.