Al Ahlia Insurance Company’s initial public offering, which opened for subscription on July 4 2017, has been very well received by the market and attracted positive feedback from investors following the company’s meetings with some of the most influential investors and research analysts in the Sultanate.
Following the successful meeting of the company’s management with the research analysts, Ubhar Capital (U-Capital) has issued its IPO note with a recommendation to ‘subscribe’ to the IPO and a fair value of OMR0.350 baisas per share implying an upside of 16.6 per cent to the IPO price of OMR0.300 per share. The 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 plays as a key driver for the assigned valuation.
The IPO note also highlights the strength and reputation of the promoters, track record of consistent financial performance compared to peers in the industry, prudent business strategy, strong solvency margin at 260 per cent, which is 160 per cent above the minimum levels prescribed by CMA, high standards of corporate governance, and the high-quality, low-risk and low-volatility investment policy adopted by the company. Further it states that at the first quarter of 2017 the company made a profit of OMR1.6 million translating into 65 per cent of its estimated profits for 2017.
“We are very pleased by the positive reception and the significant level of investor interest we have seen opening of the IPO. 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,” said Lloyd East, Regional CEO, RSA (Middle East) and managing director of Al Ahlia.
Retail investors with an interest in participating in the IPO can collect the forms and submit their applications in any of the collecting banks which include Bank Muscat, Oman Arab Bank, Ahli Bank, Bank Sohar, National Bank of Oman and Bank Dhofar.
Bank Muscat Investment Banking Division is the financial adviser and the sole issue manager for the transaction.
Al Ahlia is offering 25 million shares at an offer price of 300 baisas per offer share (comprising a nominal value of 100 baisas and a premium of 200 baisas). 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 11 baisas is expected to be paid by the company in August/September 2017 with semi-annual dividend distributions thereafter. The IPO will close on August 2, 2017.