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Iraqi Mobile-Phone Operator IPO Oversubscribed

Published Monday, 4th February 2013 08:53 am - © 2013 Dow Jones


A landmark Iraqi share offering was slightly oversubscribed, with foreign investors buying nearly three-quarters of the $1.3 billion in new stock, according to an official at the brokerage firm that organized the sale.

Shwan Ibrahim Taha, chairman of Baghdad-based Rabee Securities, said foreign investors took up about 70% of the initial public offering of Asiacell Communications, an Iraqi mobile-phone operator, with the remainder going to Iraqi investors.

Mr. Taha said the offering was slightly oversubscribed, but he declined to say by how much. Fuller details of the outcome of the IPO are due to be released on Monday.

The Asiacell IPO, the largest such offering in the Middle East region since 2008, is seen as a key test of foreign investor confidence in Iraq as it recovers from years of war.

Asiacell sold 67.5 billion shares priced at a minimum of 22 Iraqi dinars (two U.S. cents) per share.

The high level of foreign interest could signal a revival of investor confidence and a new interest in the Iraqi market, though it may also indicate that Asiacell's controlling shareholder, Qatar Telecom (QTEL.DO), has taken the opportunity to purchase new shares, and increase its holding in Asiacell from the existing 53.9%.

Qtel said last year it intends to raise its stake in Asiacell to 60%, subject to regulatory approvals. The Qatari company declined to comment Sunday on the Asiacell offering.

The offering closed earlier Sunday and the new shares are due to start trading Monday on the Iraq Stock Exchange (ISX).

The offering is expected to increase the liquidity of Iraq's tiny stock market, nearly doubling its total market capitalization to $9 billion from $4.7 billion when the Asiacell shares start trading, the ISX's chief executive Taha Abdulsalam said. Trading on the ISX is currently dominated by bank stocks.

Some analysts had been skeptical that Asiacell would be able to raise the full $1.3 billion in the IPO, amid fears about Iraq's continued political unrest, and its illiquid stock market.

On the other hand, Iraq has been experiencing robust economic growth as a result of rapidly rising oil production. Growth is expected to average 14.6% this year and 11.9% in 2014, higher than any other country in the Middle East and North Africa region, with the exception of Libya, the International Monetary Fund predicts.

And the recent rally in global stock markets has shown that investors are willing to purchase shares in riskier emerging markets in a quest for yield.

"We have had three wars, 13 years of economic sanctions and we still have a lot of problems, but we are expanding by double digits," said Mr. Taha at Rabee Securities, which acted as sole distributor and selling agent for the Asiacell offering.

All three Iraqi mobile-phone operators had been required to float a quarter of their shares by August 2011 as part of their licence agreements, but Asiacell missed the deadline and Zain Iraq, a subsidiary of Kuwait's Zain Group, and Korek, an affiliate of France Telecom (FTE.FR, FTE), have yet to announce dates for offerings or listings on the ISX.

Write to Alex Delmar-Morgan at alex.delmar-morgan@dowjones.com

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