Astro Malaysia eyes IPO of up to $2 billion

Bankers started pre-marketing yesterday for Astro Malaysia Holdings, a consumer media entertainment group that is aiming to raise about $1.5 billion to $2 billion from its initial public offering, sources said.

Astro Malaysia is Malaysia’s leading integrated cross-media group with operations in four key businesses — pay-TV, radio, content and digital — and is the biggest residential pay-TV operator in the country. In 2011, it had a market penetration rate of about 50% of Malaysian TV households, of which it had a market share of about 99% of the residential pay-TV market, according to a draft prospectus.

According to the current timetable, the pre-marketing is expected to continue until September 19 and the management roadshow is expected to start after that, the sources said yesterday. The pricing is expected during the first week of October and the listing is scheduled for mid-October.

While it hasn’t been an easy year for the world’s IPO market, Malaysia has fared strongly. Thanks to support from domestic pension money, the country has already produced two of the world’s biggest offerings this year: Felda and IHH.

In June, Felda Global Ventures, a Malaysian government-owned agricultural commodities company, raised $3.1 billion from its IPO to become the world’s second-biggest offering this year after Facebook’s $16 billion IPO. Felda was followed by Malaysia-based hospital operator IHH Healthcare, which raised $2 billion in July.

Equity capital market volume in Malaysia stands at $8.35 billion year-to-date, which is more than double that of the same period last year at $3.26 billion, according to Dealogic.

Astro Malaysia is offering up to 1.52 billion shares, of which up to 31.2% are primary shares and up to 68.8% are secondary. Astro Networks (Malaysia) is the selling shareholder. It is a wholly-owned subsidiary of Astro Holdings, the promoter of the IPO.

Of the deal, up to 1.26 billion shares, or about 83%, are offered to institutional investors, both Malaysian and foreign, and selected investors. The remaining 259.9 million shares, or 17% of the deal, are offered to the Malaysian public and eligible directors and employees.

The businesses currently held by the Astro Malaysia group were part of the Astro All Asia Networks (AAAN) group of companies, which was previously listed in 2003 in Malaysia, according to the draft prospectus. But in 2010, Astro Holdings undertook a conditional takeover offer to buy all the voting shares in AAAN, and AAAN was then delisted from the main market in June 2010, it says.

As for the company’s strengths, sources cited the market’s familiarity with the business because of its previous listing, its pay-TV business’s dominant market share, as well as the quality of the management.

There are no direct comps, but some of the domestic telecoms companies may draw some attention for comparison, one of the sources said. Investors are also looking at regional comps such as India’s Dish TV and Indonesia’s MNC Skyvision, another source said.

Astro Malaysia said it plans to use most of the proceeds for capital expenditure and for the repayment of bank borrowings.

For the year ended January 31 this year, Astro Malaysia booked M$3.89 billion in revenue, compared to M$3.66 billion in 2011, according to the draft prospectus.

The recent post-IPO performance in Malaysia has been also encouraging. Felda ended yesterday’s trading down 1.4% at M$4.78, but it is still up 5% from its IPO price of M$4.55. IHH Healthcare slipped 0.6% yesterday to finish at M$3.11, but it is also up 11% from its offering price of M$2.80.

The FTSE Bursa Malaysia KLCI Index, which ended yesterday’s trade down 1.4%, has climbed about 5.7% since the start of the year.

CIMB, Credit Suisse, Goldman Sachs, J.P. Morgan, Maybank Investment Bank and UBS are joint global coordinators for the deal. The joint bookrunners are Bank of America Merrill Lynch, Citi, DBS, Deutsche Bank, Macquarie and Morgan Stanley.