Asyad Shipping’s IPO priced between OR0.117 and OR0.123, raising OR128.1 million. Local investor demand played a key role, influencing pricing despite a cautious market outlook after previous IPO performances. Initial dividend yield is projected at 9%, increasing to 12.5% with additional payments for 2024. Shares start trading on March 12.
Oman’s Asyad Shipping has priced its initial public offering (IPO) at the upper end of its guidance range, specifically OR0.117 to OR0.123, for a total of OR128.1 million (approximately US$332.8 million). This pricing values the company at OR640.7 million, based on a free-float of 20% consisting of 1.04 billion shares.
Local investors significantly influenced the pricing strategy, with some institutions participating at smaller scales than they otherwise would have if the offering had been cheaper. The IPO pricing yields an initial dividend of 9%, and considering an additional payment for the financial year 2024, the first-year yield reaches 12.5%.
Despite this attractive yield, the stock trades at a discount compared to similar offerings by Oman’s state oil company OQ, which had yields between 8.1% and 11.9% when Asyad opened its books. The hesitation among investors can be attributed to underwhelming aftermarket performances of other Middle Eastern stocks last year. One banker noted that while international accounts anticipated double-digit dividend yields, the initial boost was insufficient for long-term conviction.
Challenges in the transaction were recognized by involved bankers, especially in light of prior offerings like OQ Exploration and Production, which affected investor sentiment. Even with Asyad’s strong asset quality, historical volatility has led to skepticism regarding exposure to the Omani market.
Previous Omani deals have presented learning experiences due to strategies such as full pro rata allocations, which were mixed in OQ Base Industries due to varying demand. For reassurance, Asyad has appointed Ubhar Capital as the stabilisation manager, a pioneering move in Oman, requiring regulatory approval to prevent market manipulation.
The initial allocation of shares sees institutions receiving 45%, retail investors obtaining 25%, and anchor investors like Qatar’s Falcon Investments and Oman’s Mars Development holding 30%. Demand for these shares has extended beyond the GCC, prominently into the UK, though expected interest from Saudi Arabia was lower.
Management’s roadshow involved visits to seven of Oman’s eleven governorates, culminating in a presentation at the Muscat Stock Exchange. It is anticipated that shares will commence trading on March 12. As pointed out by one banker, the success of this IPO is crucial to restoring confidence in the Omani market and fostering future successes.
Asyad Shipping’s IPO reflects a cautious yet strategic approach to pricing, driven mainly by local investors who navigated the challenges posed by recent performances of similar listings in the region. The appointment of a stabilisation manager indicates a commitment to supporting the stock amid market uncertainties. Overall, this IPO aims to restore investor confidence in Oman’s equity market and establish a positive precedent for future offerings.
Original Source: www.zawya.com
