Muscat: Nawras, Oman's second telecom service provider, has decided to float 260.38 million shares on the Muscat Securities Market (MSM) using the book building process, the method that is used for the first time in Oman.

Nawras, in which Qatar's Qtel has majority stakes, will be the first initial public offering (IPO) on MSM since Sohar Power Company's IPO in July 2008.

"We are quite optimistic about response to our IPO which we will be launching on September 15 under the condition of our licence," Ross Cormack, Chief Executive Officer of Nawras, told Gulf News on the sidelines of the launch yesterday.

The telecommunications company had agreed to float 40 per cent of its capital in February under the condition of its licence but the government granted the company an extension until this month (September).

"The current stakeholders will offload their shares and no fresh equity is being issued to investors," Cormack clarified.

The company's CEO added that 70 per cent of the offering is open to individual investors, while the remaining part of the issue will be open to institutional investors.

"This is an exciting day for the whole Nawras family, especially our valued customers, as this is the first step towards a stock exchange listing through which all of our stakeholders can actively take part in our future," said Cormack during his address to the media and other invitees.

Briefing on the company's progress, he said: "In the last five years, we have grown rapidly to serve nearly two million customers, and counting, representing 45 per cent of the Omani mobile market at the end of June 2010."

Morgan Stanley, BankMuscat and QNB Capital have been appointed joint lead managers with Morgan Stanley and BankMuscat confirmed as bookrunners on the transaction.

Nawras' revenue has grown from 15 million Omani riyals in 2005 to 172 million riyals in 2009. In the first half of 2010, revenues increased further from 79 million riyals in first half 2009 to 91 million riyals in first half of 2010.

"We would consider declaring dividends with respect to Financial Year 2010 onwards, with the first dividend payment therefore occurring in 2011 at the earliest," Cormack reckons.

The Capital Market Authority officials present sounded optimistic about the new IPO as well as the book-building method.

"We are hopeful that Nawras IPO will rejuvenate the MSM," said Abdullah Salem Abdullah Al Salmi, Executive Vice-President of Market Operations & Listed Companies at the CMA.

Open to residents

  • A dedicated website for Nawras IPO has been launched and the IPO is open to all Oman residents as well as foreign investors.n Nawras is the first IPO on MSM since July 2008 and biggest since 2005.

What is book building?

Book building is a method used to determine the share price of an offering, based on actual demand.

It is an interactive mechanism by which institutional investors relay indications of demand and price preference to the bookrunners, in the case of Nawras IPO, Morgan Stanley and BankMuscat.

The bookbuilding methodology will be used during the offer period to determine the offer price at which the shares being offered are allotted to all investors. The joint bookrunners, the selling shareholders and the company will use the information received from Category II Investors (Institutional and individual investors who apply for a minimum of 500,100 shares) during the offer period to determine the offer price, thus balancing demand and price and taking into account market conditions and the market's assessment of the company's valuation.