Energy

Strong institutional demand for latest Omani IPO

November 28, 2024, 5:22 PM

The Omani government is undertaking an extensive part-privatisation programme to raise money and diversify the country’s stock market

OQ Base Industries’ high hopes
Company selling 49% of shares
Oman diversifies bourse

OQ Base Industries (OQBI) has attracted strong institutional interest in its $490 million initial public offering (IPO), the Omani business’s parent company said on Thursday.

OQBI, which produces methanol, ammonia and liquefied petroleum gas, will be the third subsidiary of Omani state oil company OQ to float and join Muscat’s bourse.

The Omani government is undertaking an extensive part-privatisation programme to raise money and diversify and deepen the country’s stock market.

Oman hopes this will lead equity index compilers MSCI and FTSE Russell to award the country emerging market status. That in turn would cause passive funds tracking these benchmarks to buy Omani stocks included in such indexes, which would boost market turnover and be likely to increase company valuations.

OQBI is selling 49 percent of its shares in its IPO. Of this, 30 percent – or 14.7 percent of its total shares – is reserved for institutional investors.

This tranche, which will close on December 1, has been oversubscribed “multiple times” at the top of its 106 to 111 baizas per share range, OQ said in a statement on Thursday. There are 1,000 baizas in an Omani rial.

A second tranche for retail investors has a fixed price of 111 baizas ($0.29) per share. This portion represents 40 percent of the offering – or 19.6 percent of the company’s stock – and closes on Thursday (November 28).

The remaining tranche is reserved for four so-called anchor investors: Oman’s social protection fund, Falcon Investments, Saudi Omani Investment Company, a subsidiary of Saudi Arabia’s Public Investment Fund, and Gulf Investment Corporation, which is co-owned by the six Gulf Cooperation Council countries.

This quartet will pay a maximum price of 111 baizas per share. If all tranches pay this same price, the IPO will raise OMR188 million ($490 million). The company will debut on Muscat’s bourse on or around December 12.

In October, OQ Exploration and Production (OQEP) raised OMR748.8 million ($1.94 billion) in Oman’s largest-ever initial public offering, selling 25 percent of its shares in a process that, unlike the OQBI flotation, gave a discount to retail investors.

OQ’s pipeline business OQ Gas Networks (OQGN) also went public last year, raising $749 million by offloading 49 percent of its shares.

OQEP’s shares ended Wednesday at OMR0.352, down 9.7 percent on its IPO price of OMR0.390. OQGN closed at OMR0.133, which is 5 percent below its IPO price, Muscat Daily reported.