18 August 2005
MUSCAT -- Oman's premier financial institution is set to tap the international capital market with a multi-million dollar global depository receipt (GDR) issue.
In an extraordinary general meeting (EGM) held here yesterday, shareholders of BankMuscat approved a proposal to allow the bank to increase its authorised share capital from RO75 million ($195 million) to RO125 million ($325 million) comprising 125 million shares of a nominal value of RO1.000 each.
The bank plans to issue up to 6,878,765 GDRs, which represents 10 per cent of the bank's issued share capital, as on date. BankMuscat has already obtained all necessary regulatory approvals to go ahead with the proposed issue.
BankMuscat will be the first AGCC entity, and probably the third from the entire Middle East to go in for a GDR issue. The issue is expected to hit the international capital market by the end of this year.
The bank, it is understood, has applied to the UK Listing Authority for its GDRs to be admitted to trading on the London Stock Exchange. The net proceeds of which are expected to fund the development of both BankMuscat's domestic banking operations and international operations. Citigroup has been appointed as global coordinator and sole book-runner for the planned issue. HSBC has been appointed the local custodian to this issue.
BankMuscat Chairman Sheikh AbdulMalik bin Abdullah Al Khalili said: "BankMuscat has always been open to considering internationally accepted funding options when seeking to raise funds.
"The GDR route, we believe, will allow us to maintain the lowest possible dilution, while considerably enhancing shareholder value. This is an important step forward to us both as an organisation that is committed to providing superior returns to our stakeholders and also as a leading Omani institution that is fast setting new benchmarks in the international banking arena."
A global depository receipt is a share predominantly denominated in US dollars of a publicly traded non-American company listed on the London or Luxembourg Stock Exchange.
Depository Receipts (DRs) are created when the domestic currency shares of a company are delivered to the depository's domestic custodian bank, against which the depository bank issues DRs in US dollars. These DRs can be traded freely either by listing on a foreign stock exchange or in the over the counter market or amongst qualified institutional buyers. Holders of GDRs exercise the same rights as ordinary shareholders.
BankMuscat is the first Omani institution to opt for the GDR option.
"We believe this will result in far greater international investor interest in Oman and its economy and will also set a trend which many institutions can follow, resulting in greater inflows of foreign capital into the country", Sheikh AbdulMalik added.
BankMuscat is the largest bank in Oman, with a 37.13 per cent market share by total loans ($3.46 billion) and a 36.26 per cent market share by total assets ($4.97 billion) as of June-end 2005. The bank has a strong presence in retail banking (with 90 branches and 166 automated teller machines, corporate banking, treasury and investment banking, asset management and private banking across the country.
BankMuscat also has a representative office in Dubai and a 49 per cent investment in a full commercial bank in Bahrain, BankMuscat International. In addition, the bank has a 31.05 per cent shareholding in Centurion Bank, a retail-focused private sector bank in India with 75 branches and 24 extension counters. BankMuscat has posted a net profit of RO21.1 million ($54.8 million) for the half-year ended June 30, 2005. As at December 31, 2004, shareholders' equity stood at RO194.3 million ($504.8 million).
As GDRs represent ordinary shares of a company, the issue will result in a significant increase in BankMuscat's capital. BankMuscat is in the process of further expanding its operations in the region through BankMuscat International, and a GDR issue will further strengthen its capital-base to help emerge as one of the leading banks in the Middle East.
"What's best about a GDR issue is that it will mark the beginning of foreign capital coming into the Omani stock market in a big way. In fact, Oman was the first country in the AGCC that opened the stock market to foreigners. For the GDR issue, BankMuscat may need to conduct road shows in at least 8-10 major cities in the world, which will be like marketing Oman in the international market more competently.
"The road shows will present Oman's economic and financial market strengths to the developed markets," a foreign fund manager hoped.
Major non-Omani investors, other than AGCC citizens and funds, operating in Oman, are from the UK. Non-Omani investors' entry had played a key role in boosting the domestic stock market sentiment in the recent past. Times Business had reported about the bank's GDR proposal on June 18, 2005. Major shareholders of the bank include Diwan of Royal Court Affairs (22.06 per cent), Societe Generale (10.06 per cent) and Muscat Overseas (6.6 per cent). BankMuscat share is currently quoted at around RO9.940 on the Muscat
Securities Market.
MUSCAT -- Oman's premier financial institution is set to tap the international capital market with a multi-million dollar global depository receipt (GDR) issue.
In an extraordinary general meeting (EGM) held here yesterday, shareholders of BankMuscat approved a proposal to allow the bank to increase its authorised share capital from RO75 million ($195 million) to RO125 million ($325 million) comprising 125 million shares of a nominal value of RO1.000 each.
The bank plans to issue up to 6,878,765 GDRs, which represents 10 per cent of the bank's issued share capital, as on date. BankMuscat has already obtained all necessary regulatory approvals to go ahead with the proposed issue.
BankMuscat will be the first AGCC entity, and probably the third from the entire Middle East to go in for a GDR issue. The issue is expected to hit the international capital market by the end of this year.
The bank, it is understood, has applied to the UK Listing Authority for its GDRs to be admitted to trading on the London Stock Exchange. The net proceeds of which are expected to fund the development of both BankMuscat's domestic banking operations and international operations. Citigroup has been appointed as global coordinator and sole book-runner for the planned issue. HSBC has been appointed the local custodian to this issue.
BankMuscat Chairman Sheikh AbdulMalik bin Abdullah Al Khalili said: "BankMuscat has always been open to considering internationally accepted funding options when seeking to raise funds.
"The GDR route, we believe, will allow us to maintain the lowest possible dilution, while considerably enhancing shareholder value. This is an important step forward to us both as an organisation that is committed to providing superior returns to our stakeholders and also as a leading Omani institution that is fast setting new benchmarks in the international banking arena."
A global depository receipt is a share predominantly denominated in US dollars of a publicly traded non-American company listed on the London or Luxembourg Stock Exchange.
Depository Receipts (DRs) are created when the domestic currency shares of a company are delivered to the depository's domestic custodian bank, against which the depository bank issues DRs in US dollars. These DRs can be traded freely either by listing on a foreign stock exchange or in the over the counter market or amongst qualified institutional buyers. Holders of GDRs exercise the same rights as ordinary shareholders.
BankMuscat is the first Omani institution to opt for the GDR option.
"We believe this will result in far greater international investor interest in Oman and its economy and will also set a trend which many institutions can follow, resulting in greater inflows of foreign capital into the country", Sheikh AbdulMalik added.
BankMuscat is the largest bank in Oman, with a 37.13 per cent market share by total loans ($3.46 billion) and a 36.26 per cent market share by total assets ($4.97 billion) as of June-end 2005. The bank has a strong presence in retail banking (with 90 branches and 166 automated teller machines, corporate banking, treasury and investment banking, asset management and private banking across the country.
BankMuscat also has a representative office in Dubai and a 49 per cent investment in a full commercial bank in Bahrain, BankMuscat International. In addition, the bank has a 31.05 per cent shareholding in Centurion Bank, a retail-focused private sector bank in India with 75 branches and 24 extension counters. BankMuscat has posted a net profit of RO21.1 million ($54.8 million) for the half-year ended June 30, 2005. As at December 31, 2004, shareholders' equity stood at RO194.3 million ($504.8 million).
As GDRs represent ordinary shares of a company, the issue will result in a significant increase in BankMuscat's capital. BankMuscat is in the process of further expanding its operations in the region through BankMuscat International, and a GDR issue will further strengthen its capital-base to help emerge as one of the leading banks in the Middle East.
"What's best about a GDR issue is that it will mark the beginning of foreign capital coming into the Omani stock market in a big way. In fact, Oman was the first country in the AGCC that opened the stock market to foreigners. For the GDR issue, BankMuscat may need to conduct road shows in at least 8-10 major cities in the world, which will be like marketing Oman in the international market more competently.
"The road shows will present Oman's economic and financial market strengths to the developed markets," a foreign fund manager hoped.
Major non-Omani investors, other than AGCC citizens and funds, operating in Oman, are from the UK. Non-Omani investors' entry had played a key role in boosting the domestic stock market sentiment in the recent past. Times Business had reported about the bank's GDR proposal on June 18, 2005. Major shareholders of the bank include Diwan of Royal Court Affairs (22.06 per cent), Societe Generale (10.06 per cent) and Muscat Overseas (6.6 per cent). BankMuscat share is currently quoted at around RO9.940 on the Muscat
Securities Market.
© Times of Oman 2005
