Bank Nizwa proposes Alizz Islamic Bank merger backed by Ominvest investment

Dubai: Oman's Islamic banking sector could be headed for one of its biggest shake-ups in years after Bank Nizwa proposed acquiring Alizz Islamic Bank and merging it into its operations, while bringing Ominvest on board as a strategic shareholder.

The proposal, disclosed through the Muscat Stock Exchange on Thursday, would combine two established players in the country's Islamic banking market and create a larger lender with a broader customer base and stronger capital support.

Bank Nizwa plans to acquire the entire issued share capital of Alizz Islamic Bank from Oman Arab Bank at an indicative valuation of 1.2 times book value before folding the business into its own operations.

The proposed transaction would also introduce Oman International Development and Investment Company, better known as Ominvest, as a significant shareholder in the combined entity.

Ominvest's board has approved participation in the funding structure supporting the acquisition.

If completed, the investment company could own up to 20% of Bank Nizwa through the subscription of newly issued shares.

Proceeds from the share issue would be used to help finance the transaction.

Bank Nizwa also plans to raise additional funding through the issuance of perpetual Additional Tier 1 sukuk.

The companies did not disclose the size of Ominvest's investment, the value of the transaction or the planned sukuk issuance.

The proposal remains non-binding and still requires negotiations, due diligence and approvals from regulators, shareholders and other parties involved in the process.

Alizz Islamic Bank currently operates as a wholly owned banking subsidiary of Oman Arab Bank following its takeover in 2020.

Its transfer to Bank Nizwa would alter the structure of Oman's Islamic banking market and create a larger institution with greater scale.