Oman power firms’ IPOs receive strong recommendations

03/06/2014 06:50 AST

Stock market analysts see significant upside potential to the issue price of initial public offerings (IPOs) of Al Batinah Power and Al Suwadi Power.

Regional research analysts have strongly recommended subscription to the IPOs of Al Batinah Power Company and Al Suwadi Power Company.

Research analysts highlighted the stable business profile, attractive dividend yields and proven track record of the strong group of committed founding shareholders as key factors underpinning the positive investment case for both IPOs.

Ten brokerage houses or investment banking division of banks have suggested upside potential in the share offer. Among them, Oman Arab Bank set a target price of 142 baisas for Al Suwadi Power and 145 baisas for Al Batinah Power, Al Shurooq set a target price of 147 baisas for Al Suwadi and 143 baisas for Al Batinah, Al Maha set a target of 149 baisas for Al Suwadi and 145 baisas for Al Batinah and Bank Muscat set a price of 155 baisas and 154 baisas for Al Suwadi and Al Batinah.

Strength of offerings

"These recommendations are a powerful confirmation of the strength of the offerings. The analysts have provided a very positive feedback for both offerings. They believe that the offerings are attractively priced and have recommended a buy with a potential upside of between 9 per cent and 37 per cent from the offered IPO price. Such a positive analyst consensus is obviously pleasing and also reflects the sentiment of the investors we've met so far, both Omanis and non-Omanis," said Przemek Lupa, CEO of Al Suwadi Power.

"We're confident that potential investors will also recognise the attractiveness of these IPOs, not only in terms of expected returns, but also the wider commercial story – the sector opportunity, the robust business model, and our highly experienced partners," noted Jürgen De Vyt, CEO of Al Batinah Power.

Al Batinah Power is offering 236,210,601 existing shares at a price of 128 baisas per share (comprising nominal value of 100 baisas, share premium of 26 baisas and issue expenses of 2 baisas) totaling OMR30.2 million. Al Suwadi Power is offering 250,042,219 existing shares at a price of 130 baisas per share (comprising nominal value of 100 baisas, share premium of 28 baisas and issues expenses of 2 baisas) totaling 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.

The IPOs will close on June 9, and application forms are available for collection at any branches of the subscription banks, which are Bank Muscat, BankDhofar, National Bank of Oman, Oman Arab Bank, Bank Sohar and ahlibank.

Times of Oman