MUSCAT - A public issue of shares by the largest independent power and water generation company in Oman - the $415 million AES Barka SAOC (AESB) - has received a "very exciting" response, senior officials of the company and issue managers said here yesterday.
The IPO opened on November 21 with 11.2 million equities on offer at a price of 990 baisas each, including 20 baisas as issue expenses.
The offer is restricted to subscription by nationals of the Sultanate and Omani corporate entities. The closing date is December 20.
AESB is promoted by AES Corporation of the United States (85 per cent) and Multitech LLC (15 per cent), a Bahwan Engineering Group company, with an authorised capital of RO100 million, consisting of 100 million shares of RO1 each.
The issued and paid capital is RO32 million (32 million shares of RO1 each), 35 per cent of which is now being offered to the Omani public as part of a contractual commitment to the government by the founders. AES is offloading 27 per cent and Multitech eight per cent from their existing shareholding.
"The response we have received so far has been very exciting... Applications are disappearing in 50s and 100s," K Gopakumar, Assistant General Manager, Treasury and Investment Banking, of Bank Muscat, financial advisor and lead manager for the IPO, said.
"We are getting applications even from remote places. It has been very positive. The market is receiving it very well," he told a Press conference, adding: "From the initial response to the issue, we feel that it will be sold out quite easily."
Nadeem Rizvi, ASEB's chief financial officer, noted that the issue had been "priced at a substantial discount to the market multiples and is expected to provide average dividend yield of approximately 14 per cent over the next four years."
This, he added, was substantially higher than the Muscat Securities Market's average dividend yield of 3.8 per cent.
Operating revenue has been projected at around RO43 million for the next three years and RO40 million for 2008, and profit after tax at RO8 million, RO9 million, RO7 million and RO7.1 million, respectively.
Forecasts of earnings per share for this period are 260, 283, 226 and 225 baisas and dividend 12, 19, 11 and 13 per cent.
The AES-Multitech consortium was awarded the 'Build, Own and Operate' (BOO) project, a significant part of the country's vigorous privatisation programme, by the government for a 15-year renewable period following a competitive bidding process. Commercial operations began in June 2003.
The 427 MW gas fired power plant and 20 million-gallon-daily desalination unit is situated on the Omani coast, about 60 kilometres north-west of Muscat. The land for the plant is owned by the government and has been leased to ASEB for 25 years.
The company has entered into an agreement with the Ministry of Housing, Electricity and Water for the sale of power and water and a pact with the Ministry of Oil and Gas for the purchase of natural gas, both for 15 years.
These long-term contracts, Chief Executive Officer Larry Cantrell said, "clearly define and secure the cash flow streams of the company."
He added that as the largest operating independent power and water project in Oman, AES Barka "helps produce valuable water and energy resources, both of which are integral to the sustainable growth of the Omani economy."
Cantrell recalled that the company was awarded the 'Investment Project of the Year 2003' in the annual Oman Awards for Excellence.
"Testimony to the soundness of our business strategy is also our proven financial track record," he said, adding: "We have been profitable since June 2003 and have declared dividends in the year 2004."
FROM RAVINDRA NATH
© Khaleej Times 2004
