Malaysia's biggest mobile service provider, Maxis Bhd, aims to raise as much as $3.65 billion in the country's biggest IPO, despite a cooling off in demand for Asian listings following China's flurry of offerings.

Maxis, which will sell 30 percent of its existing share capital in the IPO, has set an indicative price range of 4.80 ringgit to 5.50 ringgit a share, according to a term sheet obtained by Reuters on Friday.

The deal comes to market at a time when demand for IPOs has soured slightly. South Korea's POSCO Engineering & Construction this week canceled its planned $926 million offering, citing disappointing bookbuilding.

In Hong Kong, Guangzhou-based developer Evergrande dramatically slashed its fundraising target to just $828 million from $2.1 billion.

Maxis' share offer comprises an institutional tranche of 2.037 billion shares, more than 90 percent of the total, and a retail portion of 212.3 million shares. The mobile phone operator kicked off its institutional book-building for the IPO on Friday.

The term sheet showed Maxis will set aside about a third of the offering for cornerstone investors who will be subjected to a six-month lock-up period.

The IPO offers limited upside in terms of share price gain, said Kevin Low, analyst at Kuala Lumpur-based Affin Investment Bank.

Positioned as a matured yield play, we expect an active capital management theme to be the primary investment thesis for the stock, he said.

Malaysia is a fully saturated market in terms of mobile phone penetration. Mobile phone companies in Malaysia are trading at a steep premium to their regional peers.

Fidelity, the world's biggest mutual fund firm, was one of four cornerstone investors who have committed to take up the shares, a source familiar with the matter told Reuters on Friday.

Another source directly involved in the deal told Reuters earlier this week the Employees Provident Fund, Malaysia's biggest pension fund, was one of the domestic funds that had agreed to pay a maximum price of 5.20 ringgit a share for the cornerstone tranche.

YIELD PLAY

The listing of Maxis comes just two years after reclusive Malaysian billionaire Ananda Krishnan took the company private in a 40 billion ringgit deal.

The re-listing is a stripped-down version because it will house just the Malaysian business, leaving the fast-growing Indian and Indonesian operations with its unlisted parent Maxis Communications Bhd.

Ananda, ranked by Forbes magazine as Malaysia's second-richest man earlier this year, owns a 45-percent stake in Maxis Communications while Saudi Telecom 7010.SE owns a 25-percent stake. The rest is held by various domestic funds in Malaysia.

IPO proceeds will be used to reduce Maxis Communications' debt and to meet funding requirements of its investments in India and Indonesia.

Maxis said in its draft prospectus it would pay out 75 percent of its earnings as dividends.

The listing will enable the company to access the equity capital market as it pursues growth opportunities.

CIMB, Credit Suisse and Goldman Sachs are joint bookrunners for the IPO, and UBS, JPMorgan and Nomura are co-bookrunners.

($1=3.396 Ringgit) (Additional reporting by Saeed Azhar in SINGAPORE; editing by Valerie Lee)

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