Al Batinah Power, Al Suwadi Power IPO receive tremendous response

16/06/2014 05:12 AST

Heavy oversubscription is seen in the initial public offerings (IPOs) of Al Batinah Power and Al Suwadi Power, which closed a month-long subscription on June 9.

Market sources said that institutional demand was more than retail apetitie.

Although unofficial sources talk about more than 10 times oversubscription, sources at the issue managers declined to comment on it, saying it will be communicated to the media only after getting approval from the market regulator Capital Market Authority (CMA).

The heavy oversubscription of the two issues was mainly due to expectation of stable returns from power companies as well as pent-up demand for initial public offerings in the market.

"The good dividend yield, which is around 8.5 per cent, is a major factor for the better demand for the stock," said a market source, who does not want to be named.

Allowing expatriates to invest in the share offers, unlike Omantel, is also cited as a reson for heavy subscription. An approval from CMA for the proposed allotment is expected on June 19, refund will start on June 22 and listing of shares on the Muscat Securities Market will be on June 23.

An official at the issue manager said listing of shares will not be advanced and it will be as per the prospectus.

Al Batinah Power offered 236.21 million shares at a price of 128 baisas per share totaling OMR30.2 million. Al Suwadi Power also offered 250.04 million shares at a price of 130 baisas per share amounting OMR32.5 million.

Both IPOs represent an offer of 35 per cent of the share capital of each company. The shares are being sold by the current shareholders to comply with the obligations in the project founders' agreement signed with Electricity Holding Company.

Time of Oman