Zain Bahrain’s IPO ‘set to win huge response’
Analysts expect an ongoing initial public offering (IPO) by Bahrain’s second licensed full service telecommunications operator to be oversubscribed well before its scheduled close.
Zain Bahrain launched an offering of 48 million shares at a price of 190 fils ($0.50) on September 2, said a report.
The IPO will close on September 16 and the results of subscription and allotment basis will be announced on September 18. It is open to Bahraini institutional and retail investors as well as GCC institutional investors.
Dubai-based Nirvana Wealth Management’s chief analyst Varun Sutholiya told the GDN that Bahrain’s relatively high GDP per capita and rising public sector wages, which are driving private consumption growth, make the market suitable for high-value services, especially advanced mobile data services.
“Zain’s nationwide network has recently been upgraded to 4G LTE, priming the operation for increasing its market share, and potentially increasing its data revenues,” he said.
The shares being offered are equivalent to 15 per cent of issued share capital.
The current issued share capital of Zain Bahrain is BD32 million divided into 32 million shares of BD1 each.
After its conversion into a public joint stock company, the fully paid-up capital will be BD36.8 million divided into 368 million shares with face value of 100 fils.
The offering price, therefore, represents a premium of 90 fils per share, that is, 90 per cent of face value.
Based on the IPO price, the company is valued at $161.2 million (BD60.8 million).
Subsequent to the IPO, the company expects to list on the Bahrain Bourse, under the symbol ZAINBH, for which an application has been submitted to the stock exchange and the Central Bank of Bahrain.
Bahrain’s Gulf International Bank and Watani Investment Company (NBK Capital), the investment banking arm of National Bank of Kuwait, are the joint lead managers, financial advisers and book runners.
Under the terms of a licence granted in 2003, Zain Bahrain, 63 per cent owned by Kuwait’s Zain Group, was required to sell 15 per cent of its shares in an IPO and list on the Bahrain Bourse.
In May this year, Zain Group raised its stake in its Bahraini subsidiary to 63 per cent after buying a further 6.25 per cent for $12.5 million.
This was done to allow the parent to retain majority control after the stock market listing.
The acquisition valued Zain Bahrain at $200 million.
Zain Bahrain said the proceeds of the IPO amounting to BD9.1 million ($24.2 million) will primarily (95 per cent to 98 per cent) be used to fund capital expenditure, aimed at upgrading network infrastructure to improve indoor coverage, expanding capacity to meet high bandwidth demands and introducing smart features for smartphones.
It will also include expanding the current 4G LTE service for achieving speeds of up to 100Mbps and subsequently to 150Mbps and for deploying a fibre-optic network nationwide.
Zain Bahrain made a net profit of $14.3 million last year. Revenue rose 5.5 per cent to $213 million and its customer base increased 25 per cent over the same period.
The IPO is Bahrain’s first since 2010.
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