Sunday, 26 August 2012

Astro playing the listed/delisted/relisted game

Astro Malaysia Holdings Bhd (Astro) has announced it will list again on the Bursa Malaysia, the latter will most likely appreciate to have another heavyweight on share market.

But again, as many other listings lately (Bumi Armada, IHH, Malakof), this is (partially) a repackaged company that has been listed before. It all seems rather puzzling, what is the rationale about this all? Who are the winners in these exercises, and, more importantly, who are the losers?

The authorities are so confident about improved corporate governance standards in Malaysia, so surely prospective investors will be well informed about this all. But are they really?

The "Exposure draft" prospectus can be found here at the website of the Securities Commission. The size of it is enormous, 10.8Mb, 596 pages. Is there actually an investor who will read this all?

But quantity is no substitute for quality, so we really would like to see all the relevant information in the prospectus.

If we search for the word "delist" we only receive some explanation on page 52:

A few more hits don't add any information at all to this. But this information seems to sidestep the most important issues at hand, like:

  • At what share price and market cap was Astro before listed in 2003?
  • At what share price and market cap was Astro delisted in 2010?
  • How many shares were compulsory acquired?
  • How does the market cap, turnover, earnings of the current Astro compare to those of the delisted company?
  • Why was Astro listed before, why did it change its mind and delisted again?
  • Why is Astro listing again, such a short while after it delisted?
  • And why would Astro not delist again, having done so before?

Why are these important questions not answered, why is there only one small paragraph about its previous listed history, while the whole prospectus contains almost 600 pages.

Ze Moolah also blogged about Astro, and he quotes a stunning revelation that the company was delisted at RM 8.3 Billion, will be listed again around RM 18.7 Billion just two years later, for a cool RM 10 Billion difference, or RM 10,000,000,000.00. And even more stunning, the company is relisting without its overseas operations.

Surely Astro should detail these issues in its prospectus. Why is the current valuation reasonable, when the larger company was delisted at a much lower valuation, which was deemed to be "fair and reasonable"? The independent advice circular can be found here.

Salvatore Dali also blogged about Astro. He expects the IPO to be well received, which is quite possible, since government linked funds will most like "support" the share price.

Another interesting remark from Salvatore Dali: "Plus retail players can again raise their hands in the air and say the same thing, good ones you bypass us, tough ones you come to us."

How true, when large IPO's are made, retail investors have to do with peanut allocations, sometimes as small as 2% of the amount of shares. Smaller IPO's however, which are not supported by government linked funds, have large allocations for the public. But so many times these companies have disappointed, from the very first day they are listed. And the authorities have hardly ever taken any action against the promoters.

It all seems very artificial to me, and does not have much to do with a free market, but the authorities seems to be very satisfied with all of this. If retail investors actually like what they see and have confidence in what is going on, is something else. Another issue is the puzzling lack of information about previous delisting exercises.

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