TWO out of three listed companies that are majority-owned by low-profile business tycoon T Ananda Krishnan are trading below their initial public offering (IPO) price. They are Astro Malaysia Holdings Bhd and Bumi Armada Bhd.
Astro, which was delisted in 2010 and relisted two years later without its overseas business, is trading at 11.3% below its IPO price of RM3. It ended at RM2.66 last Friday — down 2% from its close of RM2.72 a year ago.
As at last Friday, about RM1.8 billion or 11.5% had been erased from Astro’s market capitalisation of RM15.6 billion when it was floated again in 2012. In this IPO, the company raised proceeds of RM1.4 billion.
Note that when Astro, inclusive of its overseas business, was taken private in 2010, its market cap was just RM8.3 billion.
Meanwhile, Bumi Armada — Ananda’s offshore service provider to the oil and gas industry — is trading at 80% below its IPO price of RM3.03 when it was relisted in 2011 after having been privatised in 2003. It closed at a historical low of 61.5 sen last Friday, down 40% year to date. Like other oil and gas counters, Bumi Armada has been hit by low crude oil prices.
As at last Friday, its market cap had halved to RM3.6 billion, from RM8.9 billion when it was relisted in July 2011.
Only Maxis Bhd, Ananda’s telecommunications company, is trading above its IPO price. At RM5.79, this is 15.8% higher than its issue price of RM5 when it was relisted in November 2009.
However, year to date, Maxis’ share price is down 12.6%. Its market capitalisation, though, stood at RM43 billion as at last Friday — higher than its value of RM36.96 billion when it was relisted. It had raised proceeds of more than RM10 billion at the time.
The weaker share prices of the listed companies in Ananda’s stable this year are a reflection of the lacklustre performance of the local stock market. YTD, the FBM KLCI is down 4.06%, ending at 1,623.8 points last Friday.
The investing community believes the operating landscape for Ananda’s companies has changed, giving rise to uncertainties.
“The operations of the companies were based on a monopoly but that has changed. Also, Ananda’s longtime lieutenant, Ralph Marshall, has retired and the group is facing legal issues overseas. So, there is a risk premium attached to the group because of the uncertainties that have emerged,” says a local fund manager who has been in the industry for over two decades.
An analyst with a local bank says: “Ananda’s companies, such as Maxis and Astro, that used to be in monopolistic industries are seeing rising competition from disruptive technologies. Also, the operating landscape of the industries they are in has changed.”
With two of Ananda’s three listed companies trading below their IPO price, rumours have been rife that the seasoned businessman might consider a corporate exercise or two for his investments.
Ananda, 78, has a track record of delisting and relisting his companies. He also undertook a slew of privatisation and corporate exercises in recent years. In 2010, Ananda took his majority-owned regional satellite network operator, MEASAT Global Bhd, and power and gaming company, Tanjong PLC, private at RM4.20 and RM21.80 apiece respectively.
At the time, news reports commented that Ananda was effectively buying back MEASAT shares at prices that were just 13% higher than the price at which he had listed the company in 2002. MEASAT is one company in Ananda’s stable that has consistently underperformed since its listing. After Tanjong was privatised, some of its businesses were carved out and sold. Its gaming business — Pan Malaysia Pools — was sold to a group of businessmen for over RM2 billion in 2011 while its power-generation unit, Tanjong Energy Holdings Sdn Bhd, was sold to 1Malaysia Development Bhd for RM8.5 billion in 2012.
Citing sources, The Edge Financial Daily said in December 2014 that Ananda was looking at selling his entire 34.9% stake in Bumi Armada — Asia’s largest floating, production, storage and offloading company. As at March 31 this year, he still had a 34.92% stake in the company.
A local daily reported last Wednesday that the tycoon may buy out the shareholders of Astro via his private vehicle Usaha Tegas Sdn Bhd. Quoting industry sources, the report said the exercise was still in its early stages and that Usaha Tegas did not think the market was valuing the company fairly.
The next day, an Astro announcement on Bursa Malaysia said, “As far as the company is aware, after due enquiry, it has not received confirmation of any privatisation proposal.”
Ananda has a 40.98% stake in Astro while Khazanah Nasional Bhd owns 20.71%.
While Ananda’s stocks are not outperforming, from an earnings perspective, the numbers of Maxis and Astro have been on an upward trend. Bumi Armada, however, is in the red because of the falling oil prices.
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