x Abu Dhabi, UAEFriday 19 January 2018

alizz IPO in Oman whets Islamic investors' appetite

Islamic investors are abuzz about alizz, which is seeking to raise as much as 400 million Omani rials in an initial public offering on the Oman stock exchange on Saturday.

Islamic investors are abuzz about alizz, which is seeking to raise as much as 400 million Omani rials (Dh3.81 billion) in an initial public offering on the Muscat Securities Market on Saturday.

The initial public offering of alizz investment bank is backed by UAE investors including Abu Dhabi's Aabar Investments, Tasameem Real Estate and First Energy Oman.

The subscription opens on Saturday and will last until October 21.

The company plans to issue 400 million shares to raise 40m rials at par value of 0.102 rials per share.

"Islamic banking in Oman has the potential to draw unbanked sections of the population into the banking market," said Jamal Darwiche, the chief operating officer designate at alizz.

"Against the GCC average of 114 per cent, Oman's banking penetration was at 70 per cent in 2010, suggesting ample room for growth in the Omani banking sector, including Islamic banking."

The Oman central bank last year authorised the establishment of Islamic banks, which forbid charging interest, in a move that followed economic unrest and strikes during the Arab Spring. Other Omani lenders have been quick to enter the market.

Bank Nizwa's listing in May attracted significant demand from investors, raising 60m rials to fund the establishment of an Islamic bank in an issue that drew 681m rials in bids.

BankMuscat, which recently launched a 96.7m rials rights issue to fund the launch of an Islamic bank, which drew significant coverage levels despite the absence from the buyers of Dubai Group, the bank's second-largest shareholder.

But BankMuscat is also the only bank to have an existing network, as both alizz and Bank Nizwa are starting from scratch.

Increased numbers of issuances come as the Arabian Gulf's capital markets are expected to rebound sharply following measures announced by the US Federal Reserve and the European Central Bank last week, which markets expect to boost the US economy, quell the euro-zone debt crisis and renew global growth.

The effect of further quantitative easing measures announced by the Fed on Thursday should help bolster local equity markets as the price of oil rises and Gulf equities appear more attractive as a consequence, said Ahmed Beydoun, the regional head of equities at Deutsche Bank.That should, in turn, help the regional market for IPOs, he added.

"What's been confirmed by the Fed last week is only going to help commodity prices and real assets," he said. "I'm very confident that the equity market is going to come back very solidly."