Share sales of three Omani insurance firms to open in August

11/07/2017 07:26 AST

Oman’s primary market will get a shot in the arm with three more insurance companies planning to open their share offer for subscription next month, close on the heels of Al Ahlia Insurance and Vision Insurance opening their Initial Public Offerings (IPOs) recently.

National Life and General Insurance, Oman and Qatar Insurance and Arabia Falcon Insurance are planning to open share offer subscriptions in August, according to reliable sources.

All insurance companies are offering 25 per cent of their paid-up capital to the investing public and institutions in one-month subscription. According to sources, the three firms that are planning to float IPOs in August are awaiting approvals for their prospectus from the market regulator, which is expected soon. The issue manager for all the three issues is Ubhar Capital (U Capital).

Al Ahlia Insurance had floated its OMR7.5 million IPO on July 4 at an offer price of 300 baisas per share.

In the IPO, 65 per cent of the offered shares have been reserved for small investors applying a minimum of 1,000 shares to a maximum of 250,000 shares, with the remaining 35 per cent of shares reserved for large investors applying for a minimum of 250,100 shares up to a maximum of 2,500,000 shares. The IPO represents an offer of 25 per cent of the share capital of the company. Likewise, Vision Insurance had also opened its OMR4 million share offer at a price of 162 baisas per share on July 9.

The 25 million shares on offer constitute 25 per cent of the share capital of the company. Vision Insurance’s issued and paid-up share capital is OMR10 million, divided into 100 million shares with a nominal value of 100 baisas per share.

Although the market sentiment is not promising, the insurance IPOs are likely to get a reasonable response from the investing public due to several reasons. The insurance industry is growing at a reasonable rate and the share offers are from existing companies so that investors can expect reasonable returns on their investment.

Also, the insurance companies (which are offering only a 25 per cent stake against 40 per cent disinvestment in normal IPOs) are floating shares as it is mandatory for them to divest stakes before August this year.

Although the Sultanate has 22 insurance companies (11 locally incorporated and 11 branch operations of foreign firms), only four companies—Dhofar Insurance, Oman United Insurance, Al Madina Takaful and Takaful Oman—are listed. Of these, Al Madina Takaful and Takaful Oman are Islamic insurance firms.

The new listings will mark a new chapter in the Omani insurance sector, as local companies will be able to withstand competition by strengthening their financial, technical and human resources. A higher capital base will result in these institutions being large enough to underwrite more risks and retain premiums within the country.

In 2014, the Omani government had asked national insurance firms to float shares on the Muscat Securities Market within three years, along with raising their minimum capital to OMR10 million from OMR5 million. Also, insurance firms must comply with all listing requirements, and promoters will have to divest a minimum of 25 per cent in favour of investors.

Times of Oman