x Abu Dhabi, UAESaturday 20 January 2018

IPO starts for Oman's SMN Power, part-owned by Mubadala

An Omnani power company part-owned by Abu Dhabi's Mubadala Development seeks a stock listing.

SMN Power Holding, an Omani electricity producer part-owned by Mubadala Development, has begun a sale of its shares to the public.

The company plans to raise 24.6 million Omani rials (Dh234.6m) by listing 35 per cent of its shares on the Muscat exchange, according to a prospectus. The initial public offering (IPO) period opened yesterday and ends on October 10.

"The demand for power in Oman has grown by 6 to 7 per cent per annum in recent years and is expected to grow even further," said Johan Van Kerrebroeck, the company's chief executive.

Despite flagging regional markets and low trading volumes, SMN was a good investment thanks to solid cash flows and a stable business, he said.

"We are in a difficult moment in terms of stability of markets worldwide," said Mr Van Kerrebroeck. But the company was "a very safe investment".

Mubadala, a strategic investment company owned by the Abu Dhabi Government, will sell 3.32 million shares in the offering, the prospectus said. That will reduce its holding from 47.5 per cent to 30.8 per cent.

SMN Power was founded in 2006 as a joint venture between the Muscat-based National Trading Company, Mubadala and Kahrabel of Dubai. Both Mubadala and Kahrabel, a subsidiary of International Power, are offloading shares in the IPO.

Since its founding, SMN has become Oman's largest single electricity supplier by opening a new generation facility and acquiring power operations in a government privatisation.

The company owns Al Rusail Powerand SMN Barka Power, which together generate 1,343 megawatts of electricity - about 35 per cent of the amount generated for Oman's power grid.

The IPO comes as markets across the region suffer steep declines in trading volumes. The daily value of shares traded in Abu Dhabi and Dubai is hovering near historic lows as investors flee the region's equities markets for greener pastures. Brokerages are being forced to close as investors' losses mount.

The timing of SMN's share offering was a product of the joint venture that formed it five years ago, Mr Van Kerrebroeck said. The agreement under which it was launched stipulated that it had to list shares by the end of October.

Following the close of the IPO period, shares are expected to list in Muscat by October 25.