May 19 2007 |
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7 Saudi Insurance Firms Launch IPOs Today
JEDDAH, 19 May 2007 -- The initial public offerings (IPOs) for 35 million shares of seven insurance companies will begin today, the Saudi Capital Market Authority (CMA) announced yesterday. The IPO is worth SR350 million at a nominal SR10 per share.The insurance companies that have been given the green signal to float their shares are: Sanad for Cooperative Insurance Company , Saudi Arabian Cooperative Insurance Company , Saudi Indian Cooperative Insurance Company , Gulf Union Cooperative Insurance Company , Al-Ahli Takaful , Allied Cooperative Insurance Group and Al-Ahlia Cooperative Insurance which on Thursday struck an agreement with Arab National Bank (ANB) to be the lead underwriters of the company's IPO that will end on May 28.
Four million shares, or 40 percent of the company's SR100 million capital, will be offered to the public.
Prince Mohammad Bin Bandar Bin Abdul Aziz, chairman of Al-Ahlia Cooperative Insurance , said his firm -- which has strategic relations with the National Insurance Company, an Egyptian company operating in the Saudi market for the past decade -- has signed agreements with Munich Re Group, an international reinsurance company, to cover the insurance risks.
Sanad for Cooperative Insurance Company is offering 8 million shares or 40 percent of its capital worth SR200 million. Saudi Indian Cooperative Insurance , Saudi Arabian Cooperative Insurance , Al-Ahlia Cooperative Insurance and Allied Cooperative Insurance Group will all float 4 million shares each or 40 percent of their capitals valued at SR100 million each.
Still some investors feel that the decision by the CMA to float all seven insurance companies coupled with future plans to list them on the Tadawul together, will cause unnecessary chaos in an already fragile market. "People these days don't have a lot of cash, so just as in the past, investors will rush to sell their shares as soon as they list on the Saudi stock market. I think this will cause a market index drop from the seven thousand range into the six or five thousand mark." said Hani, a Saudi investor.
"The decision by the CMA to group the initial public offerings together, I feel, is no problem because all seven of the insurance companies have only a small amount of shares being made public compared to larger offerings recently floated such as Kayan Petrochemical, which recently wrapped up their IPO, or Jabal Omar which is set to launch its initial public offering in about three more weeks," said Hesham Abo Jamee, head of Asset Management at Bakheet Financial Advisors in Riyadh.
Jabal Omar will go public on June 9-18 with over 2 billion shares flotation or 30 percent of its over SR6.7 billion capital. The Saudi developer plans to build hotels, apartment buildings and shopping malls in Makkah following the IPO.
By Sarah Abdullah
© Arab News 2007
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