In­vestors hope Qatar dairy will be cash cow

Kuwait Times - - Front Page -

DOHA: The cows of Qatar’s Bal­adna farm, housed in cli­mate-con­trolled farms in the desert, ex­em­plify the lengths to which Qatar has gone to re­sist what it calls an eco­nomic “block­ade” en­forced by its Saudi-led neigh­bors. When the boy­cott be­gan in June 2017, Qatar re­sponded with sweep­ing mea­sures, like liq­ui­dat­ing a quar­ter of its cash re­serves to steady the econ­omy and its cur­rency, but it also flew in hun­dreds of Hol­stein cows.

The new herd was part of a plan to es­tab­lish food se­cu­rity in the event that im­port routes were blocked - concerns that had seen su­per­mar­ket shelves emp­tied in the open­ing days of the em­bargo. This week, Bal­adna will fin­ish list­ing 75 per­cent of the com­pany on the Doha stock ex­change, al­low­ing Qatari in­vestors to own part of the Gulf na­tion’s em­bargo fight­back. “We were driven to do this by our com­mit­ment to pro­vide Qatar with a fresh and steady sup­ply of dairy prod­ucts,” said Bal­adna farm’s vice-chair­man Ramez Al-Khayyat.

The com­pany now meets more than 90 per­cent of the coun­try’s fresh dairy needs from its farm 55 km north of Doha. Rows of cows are gen­tly cooled through a sys­tem of gi­ant fans and vents that spray a fine mist as they move be­tween feed­ing and milk­ing barns. The herd, now grown to 18,000 strong, is fed hay im­ported from Europe and the United States.

With Bal­adna’s growth, Qatar is now look­ing to its nascent dairy in­dus­try to play a role in the drive to di­ver­sify the econ­omy away from oil and gas. Bal­adna stock will ini­tially only be on of­fer to Qatari in­di­vid­u­als and com­pa­nies, but bosses are still hop­ing to raise around $390 mil­lion for three-quar­ters of the com­pany’s shares. For­eign­ers will be able to own up to 49 per­cent of shares from an un­spec­i­fied fu­ture date.

The sale is dwarfed by neigh­bor­ing Saudi Ara­bia’s plans to list part of oil gi­ant Aramco, ex­pected to be the big­gest ever stock mar­ket flota­tion, but it rep­re­sents an im­por­tant land­mark for Qatar’s fledg­ling dairy in­dus­try. Khayyat told AFP the list­ing would make Bal­adna “more sus­tain­able, even for the fu­ture after the il­le­gal block­ade is eased”. But the em­bargo en­forced by Saudi Ara­bia, the United Arab Emi­rates, Egypt and Bahrain shows no signs of abat­ing, prompt­ing Bal­adna to ex­pand its prod­uct range to in­clude juices, cheeses and yo­ghurt in re­cent months. The Riyadh-led al­liance has ac­cused Doha of back­ing Is­lamist groups and Iran, is­su­ing a raft of terms Qatar must ac­cept be­fore it will lift the em­bargo that in­cludes a ban on di­rect air, land or sea trade. Doha strongly de­nies the al­le­ga­tions and has re­fused to meet the de­mands that also stip­u­late the clo­sure of its flag­ship state-run Al Jazeera broad­caster.

Qatar, with a pop­u­la­tion of 2.7 mil­lion, has also turned to coun­tries in­clud­ing Turkey, Iran and Morocco to re­place sup­ply chains sev­ered by the em­bargo. “There’s great in­ter­est from strate­gic in­vestors they’ve taken 23 per­cent,” said a source briefed on the IPO. They in­clude Qatar’s gov­ern­ment pen­sion fund and a sub­sidiary of the sovereign wealth fund. Qatar’s in­dus­try min­istry will hold a “golden share”, al­low­ing it to ap­point some di­rec­tors and veto cer­tain de­ci­sions. Bal­adna’s founders will hold the quar­ter of the com­pany not on of­fer.

The com­pany hopes the re­main­ing 52 per­cent of shares will be snapped up in the fi­nal days of the pur­chase win­dow, which closes to­day. Trad­ing will be­gin on Dec 11. Mar­ket-watcher M R Raghu said the com­pany’s growth prospects, “un­der­pinned by strong reg­u­la­tory sup­port in ad­di­tion to its dis­counted val­u­a­tion”, made the stock an at­trac­tive prospect. “Sup­port­ive gov­ern­ment poli­cies are ex­pected to put the com­pany at an ad­van­tage to com­peti­tors,” added Raghu, head of re­search at the Kuwait Fi­nan­cial Cen­tre (Markaz), re­fer­ring to sub­si­dized land, among other mea­sures.

The IPO, ex­pected to be the only such in­dige­nous of­fer­ing this year, has been heav­ily pub­li­cized. Glossy ads have ap­peared on YouTube show­ing truck­loads of cat­tle be­ing trans­ported from Qatar Air­ways cargo planes to their vast desert barns.


AL KHOR, Qatar: A worker in­spects bot­tles of milk on the pro­duc­tion line at a dairy fac­tory at Bal­adna farm 60 km north of Doha on Oct 26, 2019.

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