For one of the most highly anticipated initial public offerings (IPO) since Saudi's Ma'aden in 2008, the Asiacell share offering got off to a slow start.
Unwittingly marking the start date on a public holiday, the doors of the Iraq Stock Exchange (ISX) remained shut and roads were blocked in Baghdad to mark the Shia holy day of Arbaeen.
The Iraqi mobile operator, which is 54 per cent owned by Qatar Telecom (Qtel) is floating 67.5 billion shares, about 25 per cent of the company's share capital with an offer price of at least 22 Iraqi dinars per share (7 fils). The company is hoping to raise almost US$1.3bn (Dh4.77bn) in the domestic offering. It has been one of the longest-anticipated IPOs in the region, attracting the attention of investors keen to tap into the success story of Iraq's mobile telecoms sector. But after HSBC and Morgan Stanley pulled out as book-runners late last year, Asiacell will now have to rely on local investors to buy up the shares.
"We are aiming that locals will be the majority of subscribers. For local Iraqis this is something they hold in their hand on a daily basis and understand that this is a company that makes money," said Shwan Taha, the chairman of Rabee Securities, which is acting as the sole distributor for the offering.
As it is a domestic Iraqi offering, there is no prospectus, but the company has produced an offering booklet in Arabic, which contains information on the company that has been advertised and distributed in the local press.
International institutions and investors are able to participate only if they have a broker account in Iraq.
"We are worried [that foreign investors will abstain from the listing]. Foreign investors get very close minded in this issue, because they see things in black or white. Their view is: if they don't have custody, then I'm not coming," Mr Taha said.
However, he added, "Everybody knows custody will come sooner or later and the guy who is in today will profit massively."
HSBC was widely thought to be the most likely candidate for a custody licence in Iraq last year, but the company decided to withdraw its application. "We are no longer pursuing it [custody licence]. We were hopeful we could do something from our office in Dubai, but current regulations require the bank to be in the country and this doesn't fit with our business model," said Arindam Das, the head of HSBC Securities Services for the Middle East and North Africa.
One main concern is whether there will be a big enough appetite to cover the entire offering. "We have seen clients, diversified investors, across the Gulf making inquiries. The interest is there. It's just the logistics - whether it will be optimal for investors to participate," said Anastasios Dalgiannakis, the head of institutional sales trading at Mubasher Financial Services in Dubai.
Asiacell is the first of Iraq's three mobile operators to undergo the offering process. Both Zain Iraq, a subsidiary of the Kuwait giant and Korek Telecom, part-owned by France Telecom, are also intending to float 25 per cent of their shares as per their licence agreements issued in 2007.
All three however missed the end-August 2011 deadline citing lack of information, a weak stock exchange and general uncertainty.
Asiacell plans to list its shares on the ISX on February 3.