Biggest wave of business in 12 years
MUSCAT -- The market of initial public offerings (IPOs) on Muscat Securities Market (MSM) is expected to witness immense expansion during the rest of this year, marking the biggest wave of such activity on MSM in 12 years. Three major IPOs are due to bolster the monetary activity via Islamic banking, which was okayed recently in the Sultanate. These will be the IPOs of the Islamic banks of Nizwa and Al Izz, in addition to Oman Arab Bank's pledge to float 25 per cent of its shares on the market.
Estimates indicate that IPOs, preferential rights and an increase in capitals of companies and banks will touch RO 500 million this year and that subscription for IPO's in the Arab Gulf region will register good growth. IPOs in deeds alone crossed RO 160 billion dollars, with most of the parties issuing them located in the Arab Gulf region, and the figure is expected to cross 200 million, posting a growth rate of more than 25 per cent during 2012.
Many companies and banks have announced increase to their capitals via preferential rights. These institutions include BankMuscat, Bank Sohar and Ahli Bank. The returns will be dedicated to offering Islamic banking services. Many companies beyond the monetary sector have also announced plans to increase their capitals to support their prospective growth and these include Al Nahda Services and Al Wataniya Financing.
The IPOs due to enter MSM are enhance the market's investment potential, while liquidity rates will soar and thereby attract new categories of investors from the Sultanate and abroad. IPO operations are encouraged by the new corporate law due to be announced soon. Commenting on this scenario, Abdullah bin Salim al Salmi, CEO of the Capital Market Authority, said, "We are really in need for such IPOs on the primary market, which will reflect positively on the secondary market by providing better liquidity and more products.
Meanwhile, Omar bin Salim al Dhahab, Director-General of the Financial Services Company, expressed enthusiasm for the subscriptions which the Islamic banking sector will witness. Allowing Islamic banks to engage in business will absorb a large section of liquidity valued at billions of dollars and lying unused in banks, Al Dhahab added. Oman Arab Bank's Director-General of Investment and Development, Loay Batayna, said that the three new IPOs, coupled with the increase of capitals of existing local banks will general an unprecedented wave of business in 12 years.
© Oman Daily Observer 2012
