Unprecedented demand for OQ Exploration and Production IPO
Offering emerged as the largest IPO in the history of Oman
Muscat: The private placement of OQ Exploration and Production (QQEP) Company marks a leap for both Muscat Stock Exchange, the Omani economy and investors.
A number of specialists and economists have pointed out that the full coverage of the subscription in the institutional category is a positive indicator for investor, especially individuals, and it also confirms the interest of local and international institutions in investing in the Sultanate of Oman.
Dr Al Moatasem bin Musabah al Mutairi, Head of Investment at Bank Sohar International (Issue Manager), said that as per the prospectus approved by the Financial Services Authority, 800 million shares of the offering have been allocated to individuals, equivalent to 40 percent of the offering size.
He said that if the total demand in the second category exceeds 40 percent of the offering shares allocated to this category estimated at OMR312 million, which is greater than the total size of the previous subscription for OQ Gas Networks in all its segments), the FSA reserves the right, according to the issuance prospectus, by the procedures in force to approve the distribution of a minimum number of allocated shares only to the category of small individual investors equally, whereby the remaining shares are distributed proportionally in the same category.
He pointed out that the allocation approved in the issuance prospectus by the authority for the category of small individual investors is based on a ratio and proportion mechanism, but the authority reserves the right to regulate the allocation mechanism if the requests of applicants in this category exceed the percentage allocated to it by several times, which may affect the allocation percentage for small requests.
Great interest
Abdul Wahid bin Mohammed Al Murshidi, Head of Islamic Banking at Bank Sohar, said that the subscription received great interest since the first day of the offering, noting that the size of the offering allocated to institutions was covered by more than 100 percent in the first two days of the subscription.
He added that the high demand for this offering, coupled with the great confidence of global investment companies and institutions, is a milestone for the Muscat Stock Exchange, indicating that most brokerage firms and financial research houses have valued the share price between 440 and 458 baisas.
Mustafa bin Ahmed Salman, chairman and CEO of United Securities, said that OQEP IPO is one of the best IPOs currently and represents a major support for the Muscat Stock Exchange, and is witnessing wide interaction from institutions, investors, and individuals to subscribe to it.
He stressed that studies conducted by some brokerage and financial analysis companies show that this subscription is good in terms of return price, and they expect the stock to achieve a 20 percent increase in the price of Omani individuals, pointing out that there are large requests from several international companies from outside the Sultanate of Oman to subscribe to the shares of OQEP, which is one of the companies operating in the fields of oil and gas.
He explained that such subscriptions add capital to the Muscat Stock Exchange and attract funds to the Sultanate of Oman, which encourages other companies to go to the stock exchange, list on it, and enhance their performance.
Discount price
Louay Bataineh, CEO of Ominvest International Holding Company, said that the nature of the subscription gave the Omani citizen a privilege with an encouraging discount price to enter this subscription, which represents a government company operating in oil and gas and has strategic investments with other partners.
The IPO, which is open to subscribers from both Oman and abroad, has emerged as the largest IPO in the history of Oman and marks the first IPO in the exploration and production sector, following the successful IPOs for Abraj Energy Services Company and OQ Gas Networks last year.
The IPO aligns with the government’s economic diversification policies, embodying the goals of Oman Vision 2040 by engaging citizens and residents in government enterprises, thus expanding the ownership base.
Meanwhile Trading at the Muscat Stock Exchange last week recorded a 15 percent increase, exceeding 3,540 poimts, benefiting from the interest of individual Omani investors in selling to provide liquidity for the “OQ EP” subscription. Omani individual investors’ sales last week constituted 48.2 percent of the total trading value, compared to purchases of 21.1 percent of the total trading.
OQ Gas Networks witnessed the highest number of transactions executed last week, reaching 1,449 transactions, and the share price closed at its previous level of 144 baisas. Bank Muscat came second with 179 transactions, Abraj Energy Services and Galfar Engineering and Contracting came in third and fourth place with 174 transactions each, while Phoenix Energy came in fifth place with 124 transactions.