Oman’s Asyad Shipping IPO Achieves Strong Pricing Amid Investor Caution
Oman’s Asyad Shipping has priced its IPO at the top of the guidance range at OR0.117–OR0.123, leading to a valuation of OR640.7 million. Local investors largely drove pricing, and the offering presents a 9% dividend yield with expectations of 12.5% in the first year. Concerns over market performance have led to cautious sentiments among international investors, but local demand remains strong.
Oman’s Asyad Shipping has successfully priced its initial public offering (IPO) at the higher end of guidance, corresponding to the OR0.117–OR0.123 range, resulting in a deal valued at OR128.1 million (US$332.8 million). The pricing assigns a market valuation of OR640.7 million to the company, based on a 20% free-float of 1.04 billion shares.
Local investors significantly influenced the pricing, with some institutional participants opting for smaller allocations than initially intended had the pricing been more favorable. The initial dividend yield is set at 9%, with a projected first-year yield of 12.5% factoring in an additional payment for the 2024 financial year. This yield positions the stock at a discount compared to recent offerings by the state oil company OQ.
Concerns regarding market performance have created caution among investors, particularly in light of recent disappointing aftermarket performances of other Middle Eastern stocks. A banker noted that while the initial yield is appealing, international accounts had anticipated a double-digit yield for sustained interest. “It was not the easiest of transactions,” mentioned another banker, highlighting mixed sentiments regarding the investment landscape in Oman post-OQ Exploration and Production’s activities.
Past Omani deals have yielded varied results, with allocations and trading performance differing greatly. The shares of OQEP have decreased to approximately OR0.321 from an issue price of OR0.39. In response to investor trepidation, Asyad has designated Ubhar Capital as the stabilisation manager, accompanied by a OR10 million brownshoe—a first for Oman—to address market manipulation concerns.
Demand for the IPO was predominantly local, although investors from beyond the Gulf Cooperation Council (GCC) region, including the UK, expressed interest. Notably, the expected Saudi demand was lower than anticipated. Management conducted roadshows covering seven of Oman’s eleven governorates, culminating in an event at the Muscat Stock Exchange. 45% of shares will be allocated to institutions, 25% to retail investors, and 30% to anchor investors.
Trading of the shares is scheduled to commence on March 12. The third banker remarked, “There is still a market in Oman but we need success stories” to enhance investor confidence in future IPOs.
In summary, Asyad Shipping’s IPO marks a significant endeavor for the Omani market, achieving a favorable pricing under local investor influence. While initial yields appear attractive, uncertainties regarding past performances of similar listings may temper long-term commitments from larger institutional investors. The appointment of Ubhar Capital as a stabilisation manager underscores efforts to boost investor confidence. Oman’s financial landscape continues to evolve, and success stories will be critical for its attractiveness to domestic and international investors.
Original Source: www.zawya.com
