Riyadh: Saudis yesterday began subscribing to shares of five new insurance companies that are offering stock worth 226 million riyals (Dh226 million), or 38 per cent, of the 700 million riyal capital of the companies.
Saudi banks and ATMs have experienced a high turnout of people trying to buy shares before the 10-day deadline for the subscription expires.
The Saudi Capital Market Authority (CMA) has set 10 riyals ($2.60) as the price for each share.
The Saudi United Cooperative Insurance Company, with a capital of 200 million riyals ($53.3 million), floated eight million shares for subscription, while the Arabian Shield Cooperative Insurance Company, which has the same amount of capital, has also decided to float eight million shares, or 40 per cent, of its total shares for subscription.
Promising market
The Saudi IAC Company for Cooperative Insurance floated four million of its shares, Sab Takaful floated 3.5 million shares and the Saudi French Cooperative Company decided to float 3.1 million shares. Each of the last three companies has a capital of 100 million riyals ($26.6 million).
Basim Ouda, assistant director-general of the Arabian Shield Cooperative Insurance Company, described the insurance market in Saudi Arabia as promising.
He dismissed reports that the float of shares of the five companies together will lead to a weak subscription process.
"The insurance sector in Saudi Arabia is promising. The distribution of subscriptions of the five companies among banks will facilitate subscription in the floated shares," he said.
He attributed the CMA decision to allow five companies to float their shares at the same time to the fact that the value of the total shares floated is reasonable. He added that the success of previous shares floated by two companies was another reason as well.
By Mariam Al Hakeem
© Gulf News 2007
