May 21 2007 |
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Saudi Arabia: IPOs of Seven Insurance Firms 50% Subscribed
RIYADH, 21 May 2007 -- Around 50 percent of the 10-day initial public offering (IPO) launched by seven insurance companies in the Kingdom on Saturday were subscribed yesterday. The IPO has a total of 35.44 million shares worth SR354 million, offered at a par value of SR10 per share.Sources from the receiving banks said that majority of the shares were subscribed online, while others made use of the Automated Teller Machines (ATMs) and visited the banks to purchase their shares. Each insurance company had three receiving banks for the share transactions.
Sanad for Cooperative Insurance and Reinsurance offered a 40 percent stake, or 8 million shares; Saudi Arabian Cooperative Insurance , Saudi Indian Cooperative Insurance , Al-Ahliah Insurance and Allied Cooperative Insurance Group sold 4 million shares each, or 40 percent stakes and Gulf Union Cooperative Insurance Co. was offering a 40 percent stake, or 8.8 million shares.
Analysts expected the seven IPOs to be oversubscribed on the first day of the IPO. "It disappointed some of the companies," an analyst said, pointing out that the insurers anticipated huge response due to growth potential in the insurance industry and cheap listing price of the shares.
The government has given licenses to 26 insurance firms and 10 more applications from insurers are under consideration. NCCI, Gulf Medical and Malath Insurance are already listed in the Tadawul.
"Insurance is good business in the Kingdom due to the current economic boom in the country," he said, noting that the mandatory motor insurance and health insurance and the emergence of new economic cities have given a fresh boost to the insurance market.
He said his company has been the financial advisor and lead arranger for some of these companies that are listed in the local stock market. Being a market leader in insurance sector, he said BMG, organized the first ever Saudi-based insurance summit in the Kingdom in cooperation with the Saudi Arabian Monetary Agency. As part of its future program, he said BMG will organize programs to educate fund managers, traders and insurers on Shariah-compliant insurance to cater to the Kingdom's market.
By Mohammed Rasooldeen
© Arab News 2007
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