Nov. 10 (Bloomberg) -- Maxis Communications Bhd. is selling more than $3 billion of its flagship mobile-phone unit’s stock in Malaysia’s biggest initial public offering, according to three people familiar with the matter.

Maxis Bhd. shares will be sold at 5 ringgit ($1.48) each to institutional investors and 4.75 ringgit to individuals, according to the people, who asked not to be identified before a public announcement today. The price for institutions is at the low end of the range indicated yesterday by arranger CIMB Investment Bank Bhd.

The sale may generate about 11.2 billion ringgit, more than double the amount Petronas Gas Bhd. raised in 1995, and give billionaire Ananda Krishnan, who controls Maxis, funds to invest in markets that are growing faster than Malaysia. The offering underscores the increase in investor appetite for stocks as equity markets from Malaysia to China and India climb back to levels preceding the bankruptcy of Lehman Brothers Holdings Inc.

“There’s a flow of money into Asia because Asia is where the growth is,” said David Ng, who looks after $1.6 billion of assets as chief investment officer at HwangDBS Investment Management Bhd. in Kuala Lumpur. “Lots of managers would be underperforming their benchmarks” in the first half “so they would need to catch up for the final quarter” by investing more in equities.

Asian Share Sales

Maxis joins China Minsheng Banking Corp. and Sands China Ltd. among Asian companies pursuing at least $12.7 billion of share sales in the region as the steepest stock rally in six years drives a revival in equity offerings. China Merchants Securities Co. has said it’s planning to raise as much as 11.1 billion yuan ($1.6 billion) in an initial share sale in Shanghai.

Today’s offer values Maxis at 14 to 15 times its 2010 estimated earnings per share, according to Jeffrey Tan, an analyst at OSK Research Sdn. in Kuala Lumpur, who recommends investors “buy” the stock and has a share-price estimate of 5.80 ringgit.

Smaller Malaysian rival Digi.Com Bhd. trades at 15.6 times its estimated 2010 earnings per share. StarHub Ltd. in Singapore is valued at 10.6 times its estimated earnings next year, while MobileOne Ltd. trades at 10.5 times.

Stocks on the MSCI Asia Pacific Telecommunication Services Index are valued at an average of 13 times estimated earnings. Maxis said in its prospectus it had net income of 1.14 billion ringgit in the first six months, or 15.2 sen a share.

30% for Individuals

Maxis Communications allocated 2.037 billion shares of the local unit for institutional investors and 212.295 million shares for individual investors, or 30 percent of outstanding shares, according to a prospectus on Oct. 28. The shares would be offered at as high as 5.20 ringgit apiece to retail investors, according to the document.

Maxis controls about 40 percent of Malaysia’s mobile-phone market, making it the biggest wireless operator in the country, followed by Celcom Malaysia Bhd. and Digi. Based on the share allocation estimated in last month’s prospectus, the pricing indicates Maxis is valued at about 37.3 billion ringgit, making it the fifth-biggest company on the Malaysian stock exchange after Sime Darby Bhd., Malayan Banking Bhd., CIMB Group Holdings Bhd. and Public Bank Bhd.

The pricing was “fair, everybody’s happy,” said Lye Thim Loong, who helps manage about $500 million of assets at Avenue Invest Bhd. in Kuala Lumpur. “It’s a steady stock, you buy for yield.”

Lure of Dividends

Maxis may rely on dividend payments or expansion in the Internet market to attract investors as wireless-revenue growth slows in Malaysia. The number of mobile-phone subscriptions exceeds the nation’s population by about 4 percent, according to the latest estimates on the Malaysian Communications and Multimedia Commission’s Web site.

The wireless operator plans to pay out 75 percent of its annual profit in dividends, according to last month’s sale document. On Oct. 28, Digi.Com said it will raise its dividend payout ratio to 80 percent next year from 75 percent this year.

“The dividend yield that you’re going to get from the stock is going to be key in terms of sustaining demand and leading to what price target you’re going to see over a 12-month period,” said Johan Tazrin Ngo, Kuala Lumpur-based chief investment officer of Amara Investment Management Sdn. who bid for Maxis shares.

Promised to Re-List

Krishnan, 71, took Maxis Communications private in 2007 in a 16 billion ringgit buyout deal in a bid to accelerate expansion in India, where it owns Aircel Ltd., and in Indonesia, hoping to seek growth outside the maturing Malaysian market. He promised at the time to re-list Maxis in three years.

The decision to float the domestic unit this year came after Prime Minister Najib Razak in July said Maxis should re- list to attract investors to the Malaysian stock exchange.

The billionaire is Malaysia’s second-richest person, with wealth estimated at $7 billion, according to Forbes magazine.

Krishnan also owns Astro All Asia Networks Plc, Malaysia’s biggest pay-television operator.

To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net

Last Updated: November 10, 2009 00:51 EST