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New IPOs readying for launch on MSM

By Samuel Kutty MUSCAT -- Trading activity on the Muscat Securities Market is expected to gather further momentum with the planned initial public offerings by many firms. "The issuer concern on the success has been a major factor hindering the growth in the initial public offerings. Now the situation has improved," says Joice Mathew, Senior Manager at United Securities.
The market spread was negative and the breadth was titled towards decliners in the last quarters. The US downgrade and the European debt contagion too had hit the local bourse.
"Now with the buying interest visible across the counters amid improved trading activity, the bourse is witnessing the much needed confidence among its participants," says Joice.
According to Yahya bin Saeed al Jabri, Executive President, Capital Market Authority, Oman's commercial law is under the cabinet's consideration for revision so that all desiring companies can float 25 per cent of their capital. This will encourage more family-owned businesses to list on the local bourse.
As per the existing law of the country, a company needs to dilute a minimum of 40 per cent of its shares if it wants to be listed on MSM.
Most family businesses want to go for low-float IPOs or selling a small number of shares to maintain control of the company. By selling a small stake through offerings, companies are able to protect the value of their stake.
The CMA has given its approval for SMN Power Holding , which is all set to go for public subscription on September 11. Its offer price has been fixed at RO 3.520 per share.
The company is diluting its 35 per cent stake in line with the contractual pact with the government that the IPO would be floated before the year end.
Both Omanis and foreigners can apply for the RO 24.59 million worth IPO, which is to close subscription on October 10.
The collecting banks for the IPO are BankMuscat , National Bank of Oman and Oman Arab Bank .
According to the prospectus of the company, in all, 60 per cent of the shares are reserved for small investors, who can apply for a maximum of 5,000 shares, while the remaining 40 per cent are for those who apply for more than 5,100 shares.

The company owns two major independent projects in Oman with a power generation capacity of 1,345 mega watt is offering 35 per cent of its shares to the public as per the agreement with the government.
At the same time, Oman Arab Bank (OAB), with a paid-up capital of RO 100 million, has been cleared to float 25 per cent of its capital on the local bourse.
According to OAB chief executive Abdulkader Askalan, the listing is expected in the beginning of next year. The offer price has not yet been decided.
"The financial adviser to conduct a due diligence for determining the offer price will be appointed soon. The issue will be floated for subscription either by the end of the year or the beginning of next year," says Askalan.
The bank's principal shareholders are Oman International Development and Investment Company with 51 per cent and Arab Bank, Jordan holding the remaining shares.
Many businesses are in the IPO planning phase with a view to enter the market in the coming quarters.
Al Madina Real Estate and Bank Nizwa, the new-float Islamic bank in Oman, are the other firms in the fray to offer their shares for the investing public.
Initial public offering has been dull in the Gulf markets, although the last quarter of the year 2010 has seen some improvements with three IPOs in Oman, Bahrain and Saudi Arabia.
The largest among them was Nawras which raised $474.6 million comprising 46 per cent of the total funds raised in the quarter.

© Oman Daily Observer 2011

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