2012 is expected to be a promising year in the primary market space in the GCC in general and in Oman in particular. The sultanate is opening up the banking sector to Islamic products and services and amendments to the banking laws are being implemented to enable this transition.
Oman will have two market-listed Shariah-compliant banks. Bank Nizwa recently completed its IPO and Al Izz Islamic Bank is expected to launch one before the end of September.
In addition, rights issues have already been offered or are being planned by several conventional banks that are raising capital to set up Islamic banking platforms within their structure through an Islamic window concept as per Central Bank of Oman guidelines.
A conventional Omani bank is also expected to tap the capital market this year and we may see family businesses to go public. These are in the process of restructuring their corporate entities in order to tap the market early next year.
As much as USD 1.3 billion was raised through five IPOs during the second quarter of this year, more than three times the amount raised in the same quarter last year. Bank Nizwa's offering was oversubscribed 10.14 times by more than 37,000 applicants. More than USD 1.77 billion was collected compared to the issue size of USD 155.8 million, making it one of the most successful IPOs in the history of the Muscat Securities Market, reflecting the depth and appetite of investors as well as the level of liquidity available for attractive investment opportunities.
Al Izz Islamic Bank's expected flotation will contribute to deepening the market and strengthening liquidity. The lender is expected to offer 40% of its OMR 100 million capital.
Given Bank Nizwa's success and bearing in mind the strength of Al Izz's shareholders, including Abu Dhabi-based Aabar Investments, the IPO is expected to be another important listing on the MSM.
Oman Arab Bank has been permitted to offer 25% of its capital for public subscription instead of 40% as would otherwise be required under the Commercial Companies Law, through a special waiver from the Omani Cabinet. Oman Arab plans to issue shares after Al Izz completes the process. The bank is the only closely held entity in the Oman banking firmament.
Oman's Capital Market Authority has been active in approving right issues for commercial banks. Out of three planned right issues so far for this year, two have been completed. Bank Muscat issued OMR 97 million of shares and Al Ahli Bank issued OMR 10 million worth.
Bank Sohar is expected to issue rights shares worth OMR 10 million this month, comprising 100 million shares at par value, primarily to fund Islamic banking operations.
Lo'ai B. Bataineh is head of Oman Arab Bank's investment management group. He has more than 22 years of experience specializing in financial investments and fund management and has managed assets in excess of USD 950 million.
© Zawya 2012
