Asyad Shipping has priced its IPO at OR0.117 to OR0.123, raising OR128.1 million. The pricing yields 9%, potentially rising to 12.5% in the first year. Local investors drove the pricing, with international investor caution due to past market performances. The IPO will begin trading on March 12, with allocations of shares to institutions and retail investors.
Asyad Shipping in Oman has priced its initial public offering (IPO) at OR0.117 to OR0.123, totaling OR128.1 million (approximately USD 332.8 million). This pricing reflects a company valuation of OR640.7 million, based on a 20% free-float of 1.04 billion shares. Investor interest was primarily from local investors, with some institutions participating in smaller volumes than expected due to pricing concerns.
The IPO pricing offers a dividend yield of 9%. However, with an additional payment projected for the 2024 financial year, the first-year yield is expected to rise to 12.5%. While the valuation is lower compared to recent spin-offs from the state oil company OQ, which traded at yields ranging from 8.1% to 11.9%, there exists a cautious sentiment among investors due to poor aftermarket performances of Middle Eastern stocks.
Concerns over market conditions following previous listings have made the current environment challenging. As highlighted by a banker involved with the transaction, “It was not the easiest of transactions.” The performance of prior listings has been critical in shaping investor sentiment toward Oman’s market.
Last year’s listings in Oman were a learning experience, featuring different allocation methods that yielded mixed results. For instance, shares from OQEP traded below their issue price, while OQBI saw a considerable decline since January. To bolster investor confidence, Asyad appointed Ubhar Capital as the stabilization manager, marking a first for the region—necessary due to regulatory stipulations regarding market manipulation.
Local demand for the IPO led to significant orders, while international interest was mainly from hedge funds and some emerging market specialists. Management conducted roadshows in seven of Oman’s 11 governorates and secured participation commitments from key institutions, with expectations of shares commencing trading on March 12, securing 45% of shares for institutions and 25% for retail investors. “There is still a market in Oman but we need success stories,” concluded the banker, emphasizing future growth potential. The IPO process was coordinated by several financial institutions, including EFG Hermes and JP Morgan, among others.
In summary, Asyad Shipping has successfully priced its IPO amid cautious investor sentiment, particularly influenced by previous market performances in Oman. With a first-year yield of 12.5% and solid local demand, the offering is poised for trading, though challenges remain for attracting long-term international investment. The involvement of a stabilization manager represents a proactive measure to reassure investors. Continued success in Oman’s market will depend on future IPO performances and overall economic stability.
Original Source: www.zawya.com
