Oman plans to divest stake in 11 state-owned companies
CMA is working with the Ministry of Finance to devise a plan to decide on the companies as well as the timing for floating the issues
A E JAMES businesseditor@timesofoman.com MUSCAT: Oman government is planning to divest its stake in as many as eleven state-owned companies via initial public offerings in an apparent move to spur stock market trading and pass on the benefits of corporate earnings to the nationals.
“His Excellency Darwish bin Ismail Ali Al Balushi, minister responsible for financial affairs, stated that 11 companies will be floated in the market, probably not all of them this year,” Sheikh Abdullah bin Salem Al Salmi, Executive President of Capital Market Authority (CMA), told the Times of Oman in an exclusive interview.
He said that the CMA is working with the Ministry of Finance to work on a plan to decide on the companies as well as the timing for floating the issues. “So, it is easy for investors and the market (in general) to get to know which firm is coming out with an issue and at what point of time.”
The Capital Market Authority chief also noted that the stateowned companies that plan IPOs are non-listed, but declined to name the companies.
However, the first company to offer shares on the MSM is the majority state-owned Oman Telecommunications Company (Omantel), which is offering 142.5 million shares (or 19 per cent of government ownership in the company). The first tranche of 71.25 million shares for private placement for high net worth individuals by way of a book-building process will close on March 12. Upon successful completion of private placement, the public issue of 71.25 million shares, which is envisaged as the second phase of the divestment process, is expected to be opened for Omani individuals hopefully by the end of March.
Ahmed Saleh Al Marhoon, director general of the MSM, recently said that Oman Oil Company, the investment arm of the Oman government, plans to sell shares in some of its subsidiaries to the public. Oman Oil’s subsidiaries include Abraj Energy Services, Oman Gas Co., Oman Trading International and Salalah Methanol.
Ownership pattern
Meanwhile, the Oman government is planning to restructure the ownership pattern of 65 stateowned companies into four or five holding companies for enhancing administrative efficiency and strengthening controls.
The idea is to form one holding company for all state-owned firms in a particular sector, which is more or less in line with the recent merger of Oman Refineries and Petrochemicals Company, Aromatics Oman and Oman Polypropylene to form Oman Oil Refineries and Petroleum Industries Company (Orpic). The idea is to create four or five holding companies to own the state-owned companies in each sector. This will also help disinvestment of select firms, a goal the government is actively pursuing this year.
Although the government owns 65 companies, the state entities will be identified for divestment after taking into account various factors like the benefits to the economy, benefits to investors and the trend on the Muscat Securities Market (MSM).
The minister had said last January that the government is speeding up the process of privatisation to achieve certain social objectives. Some of the companies have performed very well and priority will be attached to firms that make profit.