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(MENAFN - Times of Oman) The RO13.33 million initial public offering (IPO) of Sohar Power Company (SPC), a major power and water producer in the country, will open for subscription today.
SPC, which has a paid-up capital of RO27.3 million, is offering 9.73 million shares of the company to the public at an offer price of RO1.370 per share, which includes a nominal value of RO1, a premium of 350 baisa and an issue expense of 20 baisa. SPC has earmarked 7.29 million shares, 75 per cent of the offering, for investors applying for a maximum of 4,000 shares. The rest 2.43 million shares — 25 per cent of the offering — will be made available for persons applying for more than 4,000 shares, according to the company's prospectus. Distribution of shares shall be on a pro-rata basis. The IPO, open to both nationals and expatriates, will close on July 31, 2008.
Sohar Power, the largest power company in the Sultanate, operates a 585MW combined cycle gas turbines plant and a 33 million gallons a day water desalination plant. As of December 31, 2007 the SPC power plant's installed capacity represented about 19.3 per cent of Oman's power operating capacity. SPC generated 1,660,439MW/h of electricity in fiscal 2007.
In Fiscal 2007, SPC generated total revenues of RO27.596 million and a profit after tax of RO3.126 million.
According to SPC, demand for electricity in Oman is growing at 6-7 per cent per annum in recent years, fuelled by private industrial activity. The government's goal is to raise power generation capacity by 2010 to 4,500MW, up from just over 3,031MW at present. The target was revised from 3,031MW in view of big industrial projects added to the list in recent years. Sohar Power IPO is the second public offer to hit the market this year after the resounding success of Voltamp Energy IPO which collected a whopping RO330 million from the market, oversubscribing by 24.3 times.
SPC is 50 per cent owned by Suez-Tractebel, a subsidiary of the French energy giant Suez. The rest 50 per cent is owned by five Omani promoters — National Trading Company, Zubair Corporation, W. J. Towell & Co., Ministry of Defence Pension Fund and Sogex Oman — with each holding 10 per cent stake.
The proceeds from the issue (including the premium) shall accrue to the current shareholders in the ratio of shares offered as the promoters of company are divesting 35 per cent of their holding to the public as part of their contractual obligation with the government to dilute their stake within four years of incorporation, the prospectus said. The company was incorporated in 2004. Post-IPO the promoters' stake will come down to 65 per cent.
BankMuscat Investment Banking Division is the financial advisor and issue manager of the IPO while the subscription banks are: BankMuscat; BankDhofar; National Bank of Oman; and Oman Arab Bank.
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