MUSCAT -- Al Batinah Power Co SAOG (under transformation), and Al Suwadi Power Company SAOG (under transformation) has announced the opening of their Initial Public Offerings (IPOs) for subscription.
The two companies are the owners of the two largest and most efficient power plants currently in operation in Oman. The founding shareholders are selling these shares to the public to comply with their obligations in the Project Founders Agreement signed with the Government's Electricity Holding Company in 2010.
Al Batinah Power is offering 236,210,601 existing shares at a price of Bzs 128 per share (comprising nominal value of Bzs 100, share premium of Bzs 26 and issue expenses of Bzs 2) totalling RO 30,234,957. Al Suwadi Power is offering 250,042,219 existing shares at a price of Bzs 130 per share (comprising nominal value of Bzs 100, share premium of Bzs 28 and issue expenses of Bzs 2) totalling RO 32,505,488.
Both IPOs represent an offer of 35 per cent of the share capital of each company. The shares are being sold by the founding shareholders to comply with their obligations in the Project Founders Agreement signed with Electricity Holding Company (EHC) in 2010.
The IPOs opened for subscription on May 11, and will close on June 9. The IPOs are open for subscription to Omani and non-Omani investors including individual and institutional investors. In each IPO, 65 per cent of the shares made available for subscription have been reserved for investors applying for a minimum of 1,000 shares and a maximum of 600,000 shares, and the balance 35 per cent of the shares have been reserved for investors applying for 600,100 shares or more, up to the maximum application amounts, (equal to 10 per cent of each offer, respectively).
At the IPO price, both companies offer an average projected dividend yield of 8.1 per cent for the first five years (excluding issue expenses). This compares with an average dividend yield of 6.5 per cent for other power companies listed on Muscat Securities Market listed, and 3.9 per cent dividend yield for the MSM 30 Index. The first dividends will be payable in June 2014 and November 2014, and twice yearly thereafter. At the offer price, both companies offer an IRR of -- 14 per cent to the investors. This translates into a substantial discount of 40-60 per cent over their Discounted Cash Flow based valuations. Bank Muscat is the financial adviser and issue manager for both the Al Batinah Power and Al Suwadi Power IPOs.
Al Batinah Power owns and operates a power plant in Sohar (known as Sohar-2), a gas-fired combined cycle power generation plant with a contracted power capacity of 744 MW, located approximately 200km northwest of Muscat in Oman within the Sohar Industrial Port area. Al Suwadi Power owns and operates a power plant in Barka (known as Barka-3), a gas-fired combined cycle power generation plant with a contracted power capacity of 744 MW.
On the occasion of the opening of the IPOs, Jurgen De Vyt, CEO of Al Batinah Power, and Przemek Lupa, CEO of Al Suwadi Power, jointly commented: "Both Al Batinah Power and Al Suwadi Power benefit from stable and predictable cash flows.
This is on account of their revenues being contracted on an availability basis with OPWP, which is owned by the Government of Oman, pursuant to a 15 year Power Purchase Agreement (PPA) that expires in March 2028."
Application forms for both IPOs are available for collection at any branches of the subscription banks: Bank Muscat, Bank Dhofar, National Bank of Oman, Oman Arab Bank, Bank Sohar and Ahli Bank.
(OEPPA Business Development Dept)
© Oman Daily Observer 2014
