The company is the owner and operator of the Salalah II IPP and is currently the largest power supplier in the Dhofar governorate. The founding shareholders are selling these shares to the public to comply with their obligations in the Project Founders Agreement signed with the Government of Oman.
Offer highlights
DGC is offering 88,896,000 Offer Shares at a price of Bzs 259 per Offer Share (Comprising a Nominal Value of Bzs 100, premium of Bzs 157 and Offer Expenses of Bzs 2 per Offer Share). The IPO represents an offer of 40% of the share capital of the company.
The IPO opens for subscription on 01 July 2018 and will close on 30 July 2018. The IPO is open for subscription to Omani and non-Omani investors including individual and institutional investors. In the IPO, 65% of the shares made available for subscription have been reserved for investors applying for a minimum of 1,000 Shares and a maximum of 100,000 Shares, and 35% of the Shares have been reserved for investors applying for a minimum of 100,001 Shares up to a maximum of 8,889,600 Shares.
At the IPO price, the company offers an average projected dividend yield of 7% for the first five years (excluding issue expenses). The first dividend of Bzs 9 per Share is expected to be paid in February 2019 and Bzs 9 per Share to be paid in August 2019 with twice yearly dividend declaration thereafter. At the offer price, the company offers an IRR of ~ 11% - 13% to the investors.
Bank Dhofar – Investment Banking Division is the ‘Issue Manager’ and EFG Hermes UAE Limited is the ‘Global Coordinator and Bookrunner’ for the transaction.
About DGC
DGC (or Salalah II IPP) comprises of two power generation plants with a combined contracted capacity of 718 MW, located at Raysut in the Dhofar Governorate of the Sultanate of Oman. The original plant, which commenced commercial operations in 2003 has a contracted capacity of 273 MW. The founding shareholders acquired DGC in June 2015. A second new 445 MW plant was developed by DGC with commercial operations commencing as per schedule on 1 January 2018.
The Company is now the largest power supplier in the Dhofar Governorate, with its total contracted power capacity representing approximately 61.74% of the total contracted capacity in the Dhofar Power System. The Company has a world class safety record with zero LTI since acquisition featured with stable and efficient growth while achieving 69.2% Omanisation.
The founders of the Company are well reputed global leaders with an established track record in the global and regional power industry: Mitsui & Co., Ltd., ACWA Power and Dhofar International Development & Investment Holding Company SAOG.
On the occasion of the opening of the IPO, Mr. Naif Alawaid, CEO of DGC commented: “The DGC IPO is a compelling investment opportunity in a company that is powering Dhofar - one of the largest governorates of the Sultanate of Oman. It also promises to take DGC into the next level of success. The company benefits from a marquee shareholder group, robust agreements with the Government including OPWP and the umbrella of the AER, with stable and predictable cash flows that support the strong investment case. The Company also benefits from fully operating assets, with no construction and commissioning risk, and a strong track record of safety, reliability and localization.”
Subscription
Application form for the IPO is available for collection at any branches of the subscription banks: Bank Dhofar, bank muscat, National Bank of Oman, Oman Arab Bank, Bank Sohar and Ahli Bank.
More information on the IPO is available on the company website at www.dgcoman.com
More information on the Founders
Mitsui & Co., Ltd.
Established in 1947, Mitsui is today one of the most diversified and comprehensive trading, investment and service enterprises in the world, with 137 offices in 66 countries as of 1 April 2018. Mitsui is actively taking on challenges for global business innovation around the world, with total assets of about USD 106.7 billion (as of 31 March 2018). Mitsui is listed on the Tokyo Stock Exchange with about 98.2% of its outstanding shares listed.
Mitsui has several decades of IPP experience with a significant presence in the IPP space in most geographical regions, including the Americas, Asia-Pac, Middle East, Africa and Europe across all fuel types. Mitsui owns a gross power generation capacity of 34 GW with a net capacity 9.3GW as of March 2018. Of this, 26% of its capacity is based in the Middle East.
Mitsui has a longstanding relationship with Oman dating from 1979, and has been contributing to economic and industrial development in Oman through various projects.
ACWA Power
ACWA Power is a developer, investor and operator of a portfolio of power generation and desalinated water production plants currently with presence in 10 countries including in the Middle East and North Africa, Southern Africa and South East Asia regions. ACWA Power’s portfolio, with an investment value in excess of USD 30 billion, can generate 22+ GW of power and produce 2.7 million m3 /day of desalinated water to be mostly delivered on a bulk basis to state utilities and industrial majors. ACWA Power operates these plants through its wholly owned subsidiary NOMAC.
ACWA Power entered Oman through its acquisition of AES’s shares in the Barka 1 IWPP (ACWA Power Barka) in 2010. Subsequently, ACWA Power has worked with ACWA Power Barka to develop, finance and construct an additional 22.5 MIGD of water capacity to meet the growing demand for water in the Muscat region. ACWA Power, through its’ initiatives, has set new benchmarks in plant performance, reliability, HSE which has translated into strong value creation for the shareholders for its assets in Oman.
DIDIC
Established in 1987 and one of the largest investment companies in the Sultanate of Oman, Dhofar International Development & Investment Holding Company SAOG (“DIDIC”) has made significant contributions to the economy of Sultanate, especially the Dhofar governorate. Since its inception, DIDIC focused on diversification of its activities to cover various economic fields, and accordingly established a bank in Oman, a financial services company, insurance company and tourism company. It also played an essential role in the development of Dhofar University and Salalah Port Services. The company has had an important role in the inception of various factories and industrial plants in the Sultanate. DIDIC has paid up capital of OMR 24.64 Million with total assets of OMR 230 Million and is listed in the Muscat Securities Market.
In addition to the development of DGC, Mitsui, ACWA Power and DIDIC have continued to demonstrate their commitment to the Omani power sector. The consortium has been awarded Oman’s largest single tendered independent power project, the 3,319 MW Ibri Sohar-3 power generation scheme which consists of two natural gas-fired cycle power plants of 1,509 MW and 1,710 MW respectively at Ibri and Sohar in the northern part of the country.
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