Omani state oil company OQ has set terms for its IPO of OQ Base Industries with a clear attempt to avoid the difficulties of its recent spin-off OQ Exploration and Production.

Nearly 1.7bn shares are on offer by the parent representing 49% of the company.

Shares are offered at OR0.106–OR0.111 each for a deal size of OR179.7m–OR188.2m (US$466.7m–$488.2m), valuing the company at up to OR385m.

Valuation represents a dividend yield of 8.5%–8.9% based on a planned 2024 dividend of OR32.7m and 9%–9.4% on 2025 forecasts, putting the company at a slight discount to previous OQ spin-offs OQEP, OG Gas Networks and Abraj Energy Services, which trade on 2024 yields of 7.6%–8.2%. A larger discount still is seen to regional peers and Adnoc spin-offs Fertiglobe and Borouge, which have yields of 6.1% and 6.4%, respectively.

Institutions will be offered 30% of the deal, split equally between local and international investors, and 40% goes to retail.

Four cornerstones will take 30% of the deal, split equally. They are Qatar Investment Authority subsidiary Falcon Investments, Gulf Investment Corporation, PIF-owned Saudi Omani Investment Company and Oman's Social Protection Fund. Falcon and SOIC were cornerstones on OQGN's IPO, with the more recent OQEP trade having only Omani cornerstones, including SPF.

OQEP completed its OR748.8m IPO in October and the state-backed seller has changed course following a poor aftermarket performance for the jumbo offering.

Shares in OQEP closed down 8.2% on debut and the stock remains 9.5% below water at OR0.353 versus a OR0.39 issue price.

Blame has been placed on the use of pro rata allocations for OQEP’s offer as well as a 10% discount for the 40% retail offer, which resulted in many subscribers flipping the stock early.

"The OQEP fiasco clearly cooled down the jets for international investors," said a banker on OQBI. "Many wanted to see the structural issues fixed. During pre-marketing international interest away from the region was more muted though from the region there is excitement due to the attractive dividend yield. I’m expecting now the issues are fixed we’ll see more international interest."

Pro rata allocations will be used on OQBI for locals, who are more comfortable with the system, but international allocations will be discretionary. There is no discount for retail investors.

Management have begun roadshows that will take place in person in Oman and virtually elsewhere.

Books open on November 24, the retail leg closes on November 28 and institutional books close on December 1. Pricing is due on December 3 and shares are expected to begin trading around December 12.

Bank Dhofar, Bank Muscat and Morgan Stanley are joint global coordinators, and joint bookrunners with BSF Capital and Kamco Invest. OQ has opted to rotate banks across its transactions, with a complete change of syndicate from OQEP and only Muscat involved in OQGN.

Source: IFR