Astro Malaysia seeks up to $1.5 billion from IPO

The pay-TV company starts bookbuilding today for the latest large offering in Malaysia.
<div style="text-align: left;">
Astro is the biggest residential pay-TV operator in Malaysia
</div>
<div style="text-align: left;"> Astro is the biggest residential pay-TV operator in Malaysia </div>

Astro Malaysia Holdings, a consumer media entertainment group, is set to start bookbuilding today for its initial public offering, which is targeted to raise between M$4.1 billion and M$4.56 billion (about $1.3 billion to $1.5 billion), sources said.

Malaysia has been a bright spot for IPOs this year. Drawing support from domestic pension money, the country has produced two of the world’s biggest offerings so far this year: Felda Global Ventures and IHH Healthcare, which raised more than $5 billion in total in June and July.

Equity capital market volume in Malaysia stands at $8.64 billion year-to-date, which is more than double that of the same period last year at $3.87 billion, according to Dealogic.

Investor sentiment has also been improving recently due to hopes for stimulus from central banks in Europe, the US and Japan. The FTSE Bursa Malaysia KLCI Index ended yesterday’s trading up 0.4%, taking its year-to-date gain to about 7.5%.

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.

Astro Malaysia is offering up to 1.52 billion shares for a price range of between M$2.7 and M$3, the sources said. The price range will allow it to raise between M$4.1 billion and M$4.56 billion ($1.3 billion to $1.5 billion). Up to 31.2% of the total shares 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.

The bookbuilding starts today (September 20). Pricing is expected around October 3, and the listing is expected around October 19, some of the sources said.

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 it was then delisted from the main market in June 2010, it says.

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

There are no directly comparable stocks, but some of the domestic telecoms companies may draw some attention for comparison, and investors are also looking at regional comps such as India’s Dish TV and Indonesia’s MNC Skyvision, they have said.

Astro Malaysia plans to use most of the proceeds for capital expenditure and for the repayment of bank borrowings. It said it aspires to maintain its leadership in the consumer media entertainment sector in the country and it will “pursue a targeted acquisition strategy to drive subscriber-base growth”.

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.

Earlier this month, IGB Reit, a real estate investment trust focusing on retail malls in Malaysia, priced its IPO at the top of the range and raised M$837.5 million ($268 million).

¬ Haymarket Media Limited. All rights reserved.