05 March 2012
Muscat: Oman's first Islamic bank's (Bank Nizwa) RO60 million initial public offering (IPO) may be floated in April, even as the bank authorities are planning to unveil their programmes for the first time to the media on March 10.
Although high-ranking officials involved in setting up the bank are tight-lipped on the plans, sources at the bank's issue manager said that Bank Nizwa will have a paid-up capital of RO150 million.
The bank's 40 per cent capital will be offered to the public. The issue, which will be offered at a fixed price and managed by Oman Arab Bank, will open for subscription for one month.
However, sources at the Capital Market Authority (CMA) said that the bank is yet to submit their IPO prospectus for seeking permission from the market regulator. "We haven't received anything from them. However, if the bank fulfills the requirements, there will not be any problem for them to come out with an IPO next month," said a CMA source.
Al Izz Bank International, the second Islamic bank under formation, is also planning to raise money from the investing public. A top-ranking official at the CMA earlier said that the market authority has already received a draft prospectus from Al Izz Bank International. The stock market regulator has returned the draft with their comments. The bank is planning to float a RO40 million issue, which will be managed by BankMuscat.
Market sources said that there will be a huge pent-up demand for the first IPO. The previous issue was of SMN Power, which came out with an IPO of RO24.6 million in September 2011. Although the retail demand was not very high, institutional investors saved the issue on stable dividend prospects.
"The long-term retail money, which has been lying idle will be invested in the first IPO," noted Kanaga Sundar, Senior Research Analyst, Gulf Baader Capital Markets. The stock market regulator is likely to stipulate a higher allocation for retail investors in the Bank Nizwa issue. Retail investors may get an allocation of 60 per cent (like other recent issues), while the remaining 40 per cent may be reserved for high net worth and institutional investors. "The whole idea is to strengthen the participation of retail investors," added Sundar.
The primary market is very important to attract liquidity to the market. These two IPOs will definitely add liquidity to the market, which will help to enhance the market depth.
According to experts on Islamic finance, the Sharia-compliant financial institutions may capture 10 per cent of the market share of the total banking assets within few years. Oman's banking assets are in the region of $40-42 billion and are growing at a healthy pace. Islamic banks and window operations are expected to get up to 10 per cent of the market in the first few years.
Muscat: Oman's first Islamic bank's (Bank Nizwa) RO60 million initial public offering (IPO) may be floated in April, even as the bank authorities are planning to unveil their programmes for the first time to the media on March 10.
Although high-ranking officials involved in setting up the bank are tight-lipped on the plans, sources at the bank's issue manager said that Bank Nizwa will have a paid-up capital of RO150 million.
The bank's 40 per cent capital will be offered to the public. The issue, which will be offered at a fixed price and managed by Oman Arab Bank, will open for subscription for one month.
However, sources at the Capital Market Authority (CMA) said that the bank is yet to submit their IPO prospectus for seeking permission from the market regulator. "We haven't received anything from them. However, if the bank fulfills the requirements, there will not be any problem for them to come out with an IPO next month," said a CMA source.
Al Izz Bank International, the second Islamic bank under formation, is also planning to raise money from the investing public. A top-ranking official at the CMA earlier said that the market authority has already received a draft prospectus from Al Izz Bank International. The stock market regulator has returned the draft with their comments. The bank is planning to float a RO40 million issue, which will be managed by BankMuscat.
Market sources said that there will be a huge pent-up demand for the first IPO. The previous issue was of SMN Power, which came out with an IPO of RO24.6 million in September 2011. Although the retail demand was not very high, institutional investors saved the issue on stable dividend prospects.
"The long-term retail money, which has been lying idle will be invested in the first IPO," noted Kanaga Sundar, Senior Research Analyst, Gulf Baader Capital Markets. The stock market regulator is likely to stipulate a higher allocation for retail investors in the Bank Nizwa issue. Retail investors may get an allocation of 60 per cent (like other recent issues), while the remaining 40 per cent may be reserved for high net worth and institutional investors. "The whole idea is to strengthen the participation of retail investors," added Sundar.
The primary market is very important to attract liquidity to the market. These two IPOs will definitely add liquidity to the market, which will help to enhance the market depth.
According to experts on Islamic finance, the Sharia-compliant financial institutions may capture 10 per cent of the market share of the total banking assets within few years. Oman's banking assets are in the region of $40-42 billion and are growing at a healthy pace. Islamic banks and window operations are expected to get up to 10 per cent of the market in the first few years.
© Times of Oman 2012
