Feb 19 2007 |
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Medgulf Follows Malath En Route to Oversubscription
Medgulf , the third cooperative insurance and reinsurance company to go public, seems en route to IPO oversubscription. Malath , the second insurance and reinsurance company to be listed in two weeks, announced 500 percent oversubscriptions with final allocation of 12 shares for individual subscribers and 495 shares for joint applications.An announcement by HSCB, Malath financial consultant and IPO manager, stated 85 percent of Malath subscriptions process was carried out via ATMs or electronically.
With Malath 's oversubscriptions funds, deposited back in the subscribers' accounts liquidity could be turned around and put into MedGulf's.
Sources close to MedGulf's establishing committee said that total funds in MedGulf's capital more than covers 40 percent of the public's share in the company's SR800 million. MedGulf's founding shareholders opted to retain 75 percent (SR600 million) leaving SR200 million to the public.
BMG and the Saudi Investment Bank (SIB) is MedGulf's financial adviser, while the National Commercial Bank (NCB) performs IPO manager duties and SIB solely takes on the responsibility of the underwriters.
A draft of MedGulf's IPO financial worthiness study shows that consultants recommended IPO share price to be in the range of SR10-14; MedGulf's shareholders' meeting minutes held Jan. 18 documents unanimity over the lower price. A major shareholder in MedGulf's, who spoke to the Gazette under conditions of anonymity, said "it (the lower IPO price) was a trade-off for the lower IPO capital share."
CAM's bid to open up the insurance sector is paying high dividends. Against initial negative impact initiated by extremists' fatwas (religious opinion) forbidding all forms of risk insurance CAM's record in support for the ta'ka'ful (cooperative) alternative is three for nil. And, with 13 more companies to go public in 2007 CAM is well placed to 13-love.
Trades preview
TASI closed Sunday 8056.69 percentage; it is projected to close at 7910.00 percentage points on Tuesday; a strong support point at 7890.30 is projected for now as a "steady floor" for non-daily traders. At the lower boundary, if average liquidity observed persists, TASI could comfortably go down as low as 7769.60 percentage points.
By Omar S Bagour
© The Saudi Gazette 2007
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