Muscat – Investor interest is ramping up for the initial public offering (IPO) of Barka Desalination Company or BDC (under transformation). The company, alongside issuance manager Bank Muscat Investment Banking, held several meetings with key investors for Phase I of the IPO (i.e. book building).

The meetings were conducted with over 50 key investors from Oman as well as the region, with some meetings held in Muscat while others through a virtual session. All meetings held in Muscat were conducted ensuring that all pandemic guidelines, including social distancing, were adhered to.

Investors liked a number of aspects for BDC, including the long-term offtake agreement until 2038 with Oman’s government-owned OPWP, the resilience of water demand in the country and the dividend yield (around 8.4 to 10.6%) offered to IPO investors. They also praised the fact that the project has renowned founders, including ENGIE, ITOCHU, SUEZ and WJ Towell, who have strong track records and deep commitment to the project.

Investors also appreciated the commitment of two big names – National Power & Water Co (an investment arm of Bahwan Engineering Group) and Bank Muscat to participate in the IPO as anchor investors and to be confirmed. their interest at the price of 145bz per share, ie at the high end of the price range.

The company also held meetings with key research analysts in the sultanate, who are expected to release research reports on the IPO. Ubhar Capital, which already released its report on Jan. 24, recommended a “subscription” rating for the IPO with a fair value of 160 bz per share, implying a 10% upside from the IPO. upper end of the IPO price range and 39% at the lower end of the price range.

Ubhar Capital’s report stated: “BDC is an attractive dividend-paying company with stable earnings on the Water Purchase Agreement (WPA). We think BDC deserves a premium because shareholders are treated differently in this company.

Phase I of the IPO will open for investor subscription on January 30, 2022 and close on February 3, 2022. During Phase I of the IPO, the offering price will be discovered through a bookbuilding mechanism based on offers submitted by large and sophisticated investors. in the sultanate. Investors will be able to view the progress of the IPO live on the Muscat Stock Exchange (MSX) website www.msx.om.

Investors must apply for a minimum of 250,100 shares in Phase I of the IPO. After successful closing of Phase I and discovery of the offering price, the IPO will be offered to retail investors at a fixed price via the E-IPO route.

Building on the revenue contracted by the Government of Oman-owned OPWP until 2038, BDC plans to offer the shares in a price range of 115bz to 145bz, resulting in an attractive dividend yield from 8.4% to 10.6% for IPO investors. The first proposed dividend of 6bz per share will be paid in April 2022, shortly after the IPO closes.

BDC Chairman Murtadha Sultan said, “BDC has taken steps to strengthen the dividend case for its public investors. BDC has no cash transfer obligations in its financing agreement with the primary lenders. In addition, the founding shareholders granted certain loans to BDC whose payments would be subordinated to BDC’s regular dividend to shareholders, including public investors. This will provide an additional cushion to the company’s dividend profile.

Commenting on Phase I of the subscription period, Patrick Thienpont, CEO of BDC, said: “The IPO of Barka Desalination Company presents a unique and compelling opportunity supported by a consortium of renowned founding shareholders, a contractual framework strong, an attractive dividend yield, and investing in a strategic asset using proven technology and driven by a strong and experienced management team. We are confident that investors will see the investment case presented by BDC and join our journey to success.

Bank Muscat Investment Banking is the financial advisor and sole issue manager for the IPO transaction. BDC has also appointed a major collection syndicate consisting of Ahli Bank, BankDhofar, Bank Muscat, Oman Arab Bank, Sohar International Bank, Ubhar Capital and United Securities, which would accept application forms from potential investors under the Initial Public Offering.