KUALA LUMPUR: The re-listing of Astro Malaysia Holdings Bhd is expected to raise some US$1.75 billion (RM5.47 billion) from the sale of 29.2% of the company.

However, only 31.2% of proceeds raised from the sale of up to 1.52 billion new and existing shares at the comeback IPO will go to Astro Malaysia, according to an updated draft prospectus dated Aug 17 on the Securities Commission’s website. Of the total 1.52 billion shares, slightly over a billion shares are sold by existing shareholders T Ananda Krishnan and Khazanah Nasional Bhd, while the rest are new shares.

From the sale of the 474.3 million new shares estimated to net around RM1.7 billion, some 58% of gross proceeds has been earmarked for capital expenditure, while 29.35% will go to repay bank borrowings. This leaves 8.6% of proceeds for general working capital and 4.1% for listing expenses.

Astro Malaysia, which is expected to come to market in September, did not provide an indicative pricing in the updated version to the initial draft released on Aug 8.

Nonetheless, the IPO is expected to raise RM5.47 billion for the company and its controlling shareholders using the indicative price of RM3.60 apiece that a Reuters report last week said bumiputera investors had been offered.

This values Astro Malaysia, which is listing without its foreign operations in India and Indonesia, at RM18.7 billion — significantly above the RM8.3 billion the old Astro All Asia Networks plc was worth at the RM4.30 privatisation price. Like the re-listing of Ananda’s Malaysian mobile arm Maxis Bhd, Astro Malaysia is widely expected to market itself as a dividend play, having promised a minimum pay-out ratio of 75%.

Ananda,who privatised the pay TV operator with Khazanah two years ago, will continue to control about 50% of Astro Malaysia’s enlarged share base post-IPO. Khazanah’s effective interest will be 20.8%, according to the updated draft document, bringing their collective interest in Astro Malaysia to 70.8%.

The updated document also named former Chief Justice of Malaysia Tun Zaki Tun Azmi as Astro Malaysia’s independent non-executive chairman, with Usaha Tegas Sdn Bhd director Augustus Ralph Marshall as executive deputy chairman.

Set to be Malaysia’s third largest IPO so far this year after Felda Global Ventures Holdings Bhd and IHH Healthcare Bhd, some 1.26 billion shares or 95% of Astro Malaysia’s offering are for institutions. Of this, some 597.69 million shares or 11.5% of the company’s enlarged share base will go to bumiputera investors.

This leaves 259.87 million shares, or 5% of its enlarged share base, for the retail offering, including that for Astro directors, employees, contractors and customers. The pool for the general public is 103.95 million shares or 2% of Astro Malaysia’s share base, half of which are for retail bumiputera investors.

As at April 30 this year, Astro Malaysia had RM479.1 million cash. Borrowings and finance lease liabilities stood at RM3.69 billion, of which RM3.66 billion is long-term liability.

While its 3.1 million customers already account for over 50% of Malaysian householders, Astro Malaysia said there is still growth to be had. Astro Malaysia intends to stay the market leader with continued investments of RM1 billion annually in content. It also intends to derive new income stream from smart and targeted marketing of additional products to its existing customer base.

Listing without the foreign pay TV operations housed under the de-listed Astro All Asia Networks, Astro Malaysia would be sheltered from the on-going courtroom disputes between Ananda and former Indonesian partner the Lippo Group as well as the wider group’s run-in with authorities over corruption allegations in India that has yet to be fully laid to rest.

CIMB Investment Bank Bhd, Maybank Investment Bank Bhd and RHB Investment Bank Bhd are joint principal advisers for the IPO.

This article appeared in The Edge Financial Daily on 23 August, 2012.