Muscat: The shares of two Omani independent power producers — Al Suwadi Power Company and Al Batinah Power Company — which were listed on the Muscat Securities Market (MSM) on Monday, have surged ahead on heavy demand from institutional investors.
Al Suwadi Power shot up 25 per cent to 162 baisas (against an offer price of 130 basias), while Al Batinah soared 26 per cent to 161 baisas (against an offer price of 128 baisas) amid heavy trading on the Muscat Securities Market (MSM). Both companies' IPOs were heavily oversubscribed and shares were alloted to the investing public last week after closing subscription on June 9.
Al Suwadi surged as high as 180 basias and Al Batinah peaked to 166 baisas at one point of time.
Market analysts said that the stable and predictable cash flow of these two power companies make them attractive medium- to long-term for low-risk appetite investors, and subscription figures indicated pent-up demand.
"It was a strong listing, better than our expectation. The market liquidity is pretty high," said a market analyst, who does not want to be named. As many as 78.53 million shares of Al Suwadi Power changed hands, while the traded volume of Al Batinah Power was 68.13 million. However, it is only 25-30 per cent of the capital base.
"The power companies will offer steady returns in the form of dividend. The buyers are mainly institutions, who have long-term perspective and they look for steady returns in the form of dividend," added the analyst.
The institutional demand for the share was pretty high as the institutional segment of the issue was oversubscribed by many times, which clearly shows a pent-up demand for the shares.
Al Batinah Power share offer raised OMR326.60 million, while Al Suwadi mopped up OMR341.7 million, taking the total application money to OMR668.1 million. The retail segment or category one of both power companies was oversubscribed by 10.8 times and institutional segment was oversubscribed to the tune of 10.5 times.
The high dividend yield of around 8.1 per cent, against the industry average of 6.1 per cent, is a major factor for the high demand for the shares.
The shareholders of both companies divested 35 per cent of their holding, aggregating to OMR62.7 million. In each IPO, 65 per cent of the shares made available for subscription were reserved for investors applying for a minimum of 1,000 shares and a maximum of 600,000 shares, and the balance 35 per cent of the shares have been reserved for investors applying for 600,100 shares or more.
Al Batinah Power IPO was offered at 128 baisas per share, while Al Suwadi Power was sold at a price of 130 baisas per share.
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