Asiacell Lures State Funds in Biggest Mideast IPO Since 2008

Asiacell Communications PJSC, the Iraqi telecom operator planning the Middle East’s biggest initial share sale since 2008, has received commitments from sovereign-backed funds, according to the deal’s organizer.

Institutional investors from the Persian Gulf, Europe and the U.S. have registered orders, said Shwan Ibrahim Taha, chairman of Rabee Securities in Baghdad, the sole arranger of the initial public offering. “Some of these funds are sovereign backed,” he said in an e-mailed answer to questions yesterday without naming any of the funds.

The company, which is majority-owned by Qatar Telecom QSC, plans to raise 1.49 trillion dinars ($1.3 billion), the most for an initial public offering in the Middle East and North Africa since Saudi Arabian Mining Co., or Maaden, received $2.5 billion more than four years ago, according to data compiled by Bloomberg. The IPO will help double the market value of the Iraq Stock Exchange from $4.66 billion last year, Chief Executive Officer Taha Ahmed Abdul Salam al-Rubaye said in a Jan. 7 interview. That compares with $383 billion for Saudi Arabia’s stock exchange, the largest in the region, $62 billion for Egypt’s gauge and $9 billion for Lebanon.

The sale will be the first in “a wave of listings” that will boost activity on the Iraq Stock Exchange, Taha said. Like Asiacell, Iraq’s two other main mobile companies -- Zain Iraq, a unit of Kuwait’s Mobile Telecommunications Co., and Korek Telecom, part-owned by France Telecom SA -- must sell 25 percent of their shares on the bourse as part of their contract.

‘Promising’ Market

“The Iraqi telecom market is promising as the country has the required critical mass and strong economic growth,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. The success of the IPO will “depend on the risk appetite of the investors in relation to the turmoil in the political situation there.”

Iraq, which overtook Iran in June as the largest producer behind Saudi Arabia in the Organization of Petroleum Exporting Countries, is reviving its energy industry nine years after the U.S.-led invasion that toppled Saddam Hussein. Bouts of violence and sectarian tension, though, have hindered the recovery of the non-oil industry.

The bourse opened in 2004 after shutting down during the invasion, and prices were updated manually on a white board before electronic trading was introduced in 2009. Banks have the largest market value among 74 listed companies, according to the latest data from the bourse received by e-mail Jan. 15.

15-Year License

Asiacell obtained a 15-year mobile telecom license in Iraq in 2007 and had 43 percent market share by revenue at the end of September with 9.9 million individual and corporate subscribers, the Sulaymaniyah-based company said in a Dec. 25 statement. Holders will offer 67.503 billion shares --equivalent to 25 percent of stock -- at a minimum of 22 dinars a share, it said. The offer opened on Jan. 3 and will close on Feb. 2.

EFG-Hermes Holding SAE, a Cairo-based investment bank, is offering international investors access to the Asiacell placement through its equity-swap product linked to Iraqi securities, according to Julian Bruce, head of institutional trading in Dubai.

“It’s really the first offering that should help to build a deep equity culture in Iraq as we see in other big Middle Eastern markets like Saudi Arabia and Egypt,” said Taha. “It’s all about giving ordinary Iraqis the opportunity to share the wealth of the country’s growing economy.”

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