Seef Strong Share Price Performance
An Innovative Offering Structure
The Road to the Initial Public Offering
Seef Strong Share Price Performance:
Shares of Seef Properties B.S.C. where listed on Bahrain Stock Exchange on 29 July 2007 and have so far outperformed all other IPO listings in Bahrain and set a successful template for privatisation in Bahrain and the region as a whole. Since then a lot of the innovative aspects of the offering structure introduced through Seef IPO has been copied by subsequent IPOs in the region.
Since its listing three months ago, Seef Properties shares have substantially created value for Retail Investors amounting to over 60% (excluding benefits of the zero-interest financing of MoF) and increase in value of over 41% for Institutional Investors.
Source: Bahrain Stock Exchange, Bloomberg
The Shares of Seef rallied last week to reach a high of BD0.196 and closed on Thursday 15 November 2007 at BD0.177.
Since its listing, Seef Properties has witnessed interest, with the stock outperforming the benchmark BSE and Service Sector indices by as much as 35.8% and 40.8% respectively. Since it's listing, the stock is up 41.6% in comparison to an increase of 5.8% in the BSE Index and 0.8% increase in the Bahrain Services Sector Index. 
Despite this increase in price, at the price of BD 0.184 Seef was trading at a 2007 expected Price-to-Earning ("P/E") ratio of 10.6 times which is an 8.6% discount to the general services sector in Bahrain which traded at P/E of 11.6 during the same period.
Trading activity in Seef Properties stock has remained high with the stock experiencing an average daily trading volume of 449,589 shares making it one of the most liquid shares trading on the BSE.
Seef Properties share performance is attributed to several factors including but not limited to the Ministry of Finance ("MOF") of the government of Bahrain's insistence on full transparency and conducting the IPO by the book, innovative structure adopted, fair valuation and pricing conducted by Securities & Investment Company.
The IPO was oversubscribed by 3.5 times, however due to the structure that favoured the Retail Offering, Retail Investors where allocated 100% of their subscription.
An Innovative Structure:
The Ministry of Finance appointed SICO Investment Bank ("SICO") as Lead Manager, Lead Underwriter and Financial Advisor in order to assist on the privatization of Seef Properties ("the Company" or "Seef") through a pioneering IPO targeted to add considerable supply of securities, stimulate the capital markets and help create a new class of capital owners.
To meet the objective of the MOF, SICO adopted a pioneering IPO structure that introduced many innovations target towards insuring the success of the offering. The innovative structure included two offerings one for Bahraini individuals subscribing for 5,000 to 50,000 shares ("Retail Offering") and another open to all individuals and institutions subscribing for 51,000 shares or more ("Institutional Offering"). The upper and lower subscription limits on the Retail Offering sheltered Bahraini individuals from oversubscription. While the Offerings where equally divided, they included a claw-back mechanism of up to 15% favouring the Retail Offering whereby in case of oversubscription the Retail Offering size may be increase up to 65% while the Institutional Offering is decrease to 35%. Another mechanism insuring maximum allocation of shares to subscribers is the over-allotment option (also referred to as "Green Shoe Option"). The over-allotment option is an option to increase the total size of the offering from 179.4 to 222.91 million shares in case of oversubscription.
With the objective of bringing value to subscribers, Seef shares where offered at the price of BD 0.125. However, the Retail Investors benefited from an additional price incentive of 15 fils discount per share. Another incentive is the instalment plan, whereby Retail Investors where required to pay only 50% upon subscription and the remaining 50% one year interest fee.
The Road to the Initial Public Offering:
From the beginning the MOF insisted that the IPO be offered to Bahraini individuals at attractive pricing in order for them to benefit from the inherent value and growth potential of the Company. Teams from the MOF, Economic Development Board ("EDB"), Seef and SICO worked together in order to insure the process is conducted thoroughly and with utmost transparency.
The renowned property valuators Cluttons and Tasheelat where appointed by SICO to carry out two separate asset valuations using two different approaches to ensure that prices are realistic, fair, and consistent. Moreover, SICO appointed Qays H. Zu'bi and Ernst & Young to carry out a detailed and through legal and financial due diligence prior to the IPO. The Economic Development Board ("EDB") and Four Communications ran a media campaign targeted towards educating the public about IPOs and the inherit risks and benefits of the investment. Furthermore, INVITA call center was appointed to answer the general public's questions about the offering.
Seef Properties is still a success story today with many of its signature assets such as Seef Mall continues to be the shopping destination of choice in Bahrain. Moreover, the new Seef Mall extension still has a long waiting list for tenants wanting to rent space despite news of other malls opening in Bahrain.
Securities & Investment Company is a securities house offering a selective range of investment banking services, including asset management, brokerage, market-making and corporate finance, on a regional basis and with a particular emphasis on Bahrain. SICO was incorporated in Bahrain in 1995 and holds an investment-banking license from the Central Bank of Bahrain.
Information on SICO's services and products is available at www.sico-bahrain.com. Seef IPO-related information is available on www.seefipo.com
-Ends-
© Press Release 2007
