Oman power companies launch public share offerings

11 May 2014

Muscat Securities Market offerings by Al-Batinah and Al-Suwadi power companies expected to raise $163m for shareholders

The local Al-Batinah Power Company and Al-Suwadi Power Company opened their initial public offerings (IPOs) for subscription on 11 May, with the two firms set to list on the Muscat Securities Market.

The power companies will each be selling 35 per cent of their equity. Al-Batinah is seeking to raise RO30.23m ($78.5m) through the issuance of 236.2m shares at RO0.128 per share, while Al-Suwadi is looking to raise RO32.5m through the issuance of 250m shares at RO0.13 per share.

Subscription is open to both local and non-local investors and the offering will be closed on 9 June.

The IPO plans are a condition in each company’s Project Founders Agreement, signed with the government-owned Electricity Holding Company in 2010, which obliges them to go public within four years of their establishment. The proceeds will go to the founding shareholders.

French/UK-based GDF Suez Energy International is the largest shareholder in both companies – it will own about 30 per cent of their share capital after the IPOs. The other founders are the local Suhail Bahwan Group, Sojitz and Shikoku Electric, both of Japan, and Oman’s Public Authority for Social Insurance (PASI).

“The companies’ power plants [were] put into commercial operation in early April 2013, which was quite an achievement as it was right on schedule. Performance has been excellent – Ebitda will be stable at about RO30m per company. As each company pays off part of its debt each year, finance cost will go down resulting in higher net profit as the years progress,” says Przemek Lupa, CEO of Al-Suwadi Power. “The Muscat Securities Market is definitely maturing. The recent offering by [telecoms provider] Omantel collected more than RO300m, which shows the liquidity is there.”

Al-Batinah owns and operates the Sohar 2 power plant, a gas-fired, combined-cycle power generation plant with a contracted capacity of 744MW. It is located approximately 200 kilometres northwest of Muscat, within the Sohar Industrial Port area.

Al-Suwadi owns and operates the Barka 3 power plant, which operates a similar model and is located approximately 80km northwest of Muscat.

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