Muscat - The initial public offerings (IPOs) of Al Batinah Power Co SAOG (under transformation) and Al Suwadi Power Co SAOG (under transformation) opened for subscription yesterday.
The two companies are the owners of the two largest power plants in Oman.
The founding shareholders are selling their shares to the public to comply with their obligations in the project founders agreement signed with the Electricity Holding Co (EHC) in 2010, a joint press release said.
Al Batinah Power is offering 236,210,601 shares at a price of 128bz each (comprising a nominal value of 100bz, share premium of 26bz and issue expense of 2bz). Al Suwadi Power is offering 250,042,219 shares at 130bz each (comprising a nominal value of 100bz, share premium of 28bz and issue expense of 2bz). Both IPOs represent an offer of 35 per cent of the share capital of each company.
The IPOs will close on June 9. The offerings are open to Omani and non-Omani investors including individual and institutional investors. Sixty-five per cent of the shares have been reserved for investors applying for a minimum of 1,000 shares and a maximum of 600,000 shares, and the balance 35 per cent have been reserved for investors applying for 600,100 shares or more, up to the maximum application amounts (equal to ten per cent of each offer, respectively).
At the IPO price, both companies offer an average projected dividend yield of 8.1 per cent for the first five years (excluding issue expenses). This compares with an average dividend yield of 6.5 per cent for other power companies listed on the Muscat Securities Market (MSM), and 3.9 per cent yield for the MSM30 index.
The first dividends will be payable in June and November this year, and twice yearly thereafter.
At the offer price, both companies offer an internal rate of return (IRR) of 14 per cent to investors.
This translates into a substantial discount of 40 per cent to 60 per cent over their discounted cash flow-based valuations, the release added.
Bank Muscat is the financial adviser and issue manager for both the IPOs.
© Muscat Daily 2014
