Al Ahlia Insurance IPO gets strong response
Al Ahlia Insurance Co’s initial public offering (IPO), which opened for subscription on July 4, has been well received by the market.
The IPO has attracted positive feedback from investors following the company’s meetings with some of the most influential investors and analysts in Oman, according to a press release issued on Wednesday. The subscription for Al Ahlia IPO will be closed on August 2.
An IPO research note issued by U-Capital recommended to ‘subscribe’ to Al Ahlia IPO. UCapital estimates a fair value of 350bz per share for Al Ahlia IPO, implying an upside potential of 16.6 per cent to the offer price of 300bz per share.
The U-Capital note acknowledges Al Ahlia’s attractive full dividend payout policy, projected 9.3 per cent dividend yield offered to investors, along with investors’ appetite for high dividend payout as a key driver for the assigned valuation.
The IPO note also highlighted the strength and reputation of Al Ahlia’s promoters, track record of consistent financial performance compared to peers in the industry, prudent business strategy, strong solvency margin at 260 per cent (160 per cent above the minimum level prescribed by the CMA), high standards of corporate governance, and the high-quality, low-risk and low-volatility investment policy adopted by the company. It further stated that in the first quarter of 2017, the company made a profit of RO1.6mn translating into 65 per cent of its estimated profits for entire financial year 2017.
Commenting on the favourable reaction by investors and analysts, Lloyd East, regional CEO, RSA (Middle East) and managing director of Al Ahlia said, “We are pleased by the positive response and significant level of investor interest. The recommendation received for the Al Ahlia IPO is a strong validation of the offer price and attractiveness of the IPO to investors. Company’s international parentage from the RSA Group, growing share in industry profits as well as attractive dividend policy being offered by the company have been well appreciated.”
Al Ahlia is offering 25mn shares at an offer price of 300bz per share (comprising a nominal value of 100bz and a premium of 200bz per share). The IPO represents an offer of 25 per cent of the share capital of the company.
At the IPO price, the company offers an attractive average projected dividend yield of 9.3 per cent for the first four years. The first dividend of 11bz is expected to be paid in August/September 2017 with semi-annual dividend distributions thereafter.
Bank Muscat’s investment banking division is the financial advisor and the sole issue manager for the IPO. Retail investors can collect the subscription forms and submit their applications in any of the collecting banks which include Bank Muscat, Oman Arab Bank, Ahlibank, Bank Sohar, National Bank of Oman and BankDhofar.
U-Capital estimates a fair value of 350bz per share for Al Ahlia IPO, implying an upside potential of 16.6 per cent to the offer price of 300bz