Fears that a deal between Etisalat and Zain might not go ahead has hit National Investments - the Kuwaiti asset management company controlled by Zain's second-largest shareholder the Kharafi Group - with shares declining the most this month.
"People are getting fed up with the uncertainty that continues to surround the deal," said Rami Sidani, the MENA region portfolio manager at Schroders Investment Management in Dubai.
National Investments shares fell 5 per cent to 470 fils yesterday on the Kuwaiti exchange. Etisalat, the telecommunications operator based in Abu Dhabi, said it offered 1.7 Kuwaiti dinars a share for a 46 per cent stake in Zain. Recent news reports say there is speculation that Etisalat may buy 40 per cent of Zain. But Etisalat says the deal is "still on" to acquire 46 per cent, which would give it a majority stake.
"We don't know how much Kharafi used to own prior to the M&A activity," said Mr Sidani. "Nasser al Kharafi personally had ownership, and through different entities that he owns like National Investments, EK Holdings, Gulf Cable and Foodco."
National Investments was appointed to gather shares from the public. "It is unknown how much Kharafi's entities have managed to gather so far," Mr Sidani said. "There is a lack of transparency and communication regarding the completion of this M&A transaction."
This month, Securities Group, a brokerage firm that had opposed the deal, changed its view to support the sale, a Kuwaiti newspaper reported. Al Fawares Holding, which owns 4.5 per cent of Zain, says it opposes the sale and has threatened to sue potential buyers of its Saudi unit, which is earmarked for divestment if the deal goes through.
Shares of Zain, which is considered to be trading at a hefty premium, remained flat at 1,520 on the Kuwait bourse. "Once the deal is completed I see Zain shares will be under pressure," said Mr Sidani. "They have reached this level by fake demand, triggered by these entities struggling to get the 46 per cent."