MUSCAT: Barka Desalination Company SAOG (under transformation) BDC, owner of the Sultanate of Oman’s largest operating water desalination plant (Barka IWP), says it plans to shortly offer part of its share capital to the public via an Initial Public Offering (IPO) based on the book-building process – a price discovery mechanism adopted by the Muscat Stock Exchange (MSX) to ensure fair pricing of a scrip floated for the first time.
BDC has announced that it will offer 30,208,800 shares, representing 40 per cent of its share capital, to the public through listing on the MSX. As anchor investors in the IPO, National Power & Water Co LLC (an investment arm of Bahwan Engineering Group), and Bank Muscat SAOG have committed to invest up to 10 per cent of the IPO at Bzs 145 per share i.e. the highest end of the IPO price range.
“The IPO of BDC is going to be the first IPO in the Sultanate of Oman under the Rules for Pricing Mechanism in Public Offering of Shares introduced by the Capital Market Authority (CMA) last year. The IPO of BDC will adopt several recent mechanisms in the Sultanate of Oman, including a two-phased approach. Phase I will be an offer to large and institutional investors through a book-building method which is aimed at finding a fair value for the offer shares. This will be followed by a Phase II offer to the retail investors which is based on a fixed price and E-IPO for investor convenience. The CMA has designed the new rules with the aim of providing clear legal framework for determining fair offer price objectively and transparently,” the company said in a press statement.
BDC has been promoted by global leaders with vast experience in water industry: ITOCHU Corporation from Japan, ENGIE and SUEZ from France along with WJ Towell Group from the Sultanate of Oman. BDC caters to around 23 per cent of water demand in the country.
BDC generates its revenues pursuant to a twenty year contracted water purchase agreement (WPA) until 2038 with the Omani government-owned Oman Power & Water Procurement Company (OPWP), ensuring stable and predictable cash flows. Backed by this contracted WPA, BDC plans to offer the shares in the IPO on book-building basis in a price range of Bzs 115 to Bzs 145 which translates into an attractive dividend yield of 8.4 to 10.6 per cent per annum to IPO investors.
Commenting on the proposed IPO, Patrick Thienpont, CEO of BDC said: “Barka Desalination Company officially commenced commercial operations in June 2018 after the remarkable construction of the Barka IWP plant, which was completed in less than 30 months. The IPO is a unique opportunity to invest in a strategic asset that will continue to be held and managed by the marquee founders. We look forward to welcoming new partners in our future journey.”
Bank Muscat Investment Banking, Oman’s largest and most experienced investment banking team, is the financial advisor and sole issue manager for the IPO transaction. BDC has also appointed a large collection syndicate for the IPO, consisting of five banks and two prominent brokerage firms who would be accepting application forms from potential investors in the IPO.
