Viva still not listed on bourse 4 years after IPO
Viva still not listed on bourse 4 years after IPO
Convincing minority shareholders to pump in more cash to the Saudi Telecom Co. (STC) affiliate when their original investment has been off-limits for so long may be a tough sell.
Viva, which competes with Zain and Qatar Telecom subsidiary Wataniya, raised 25 million Kuwaiti dinars ($88.57 million) from selling half its shares to Kuwaiti nationals in an IPO in September 2008, launching services later that year.
The company refused to explain the delay or state when it would list on Kuwait's ailing stock exchange when asked by Reuters, only saying it made an application to the regulator, Capital Market Authority (CMA), in February 2012. Saudi Telecom and the CMA declined to comment.
The dismal performance of the bourse is a likely factor. The main share index hit an eight-year low this month, but the firm's finances are a bigger consideration.
At the end of 2011, Viva had accumulated losses of 68.5 million dinars and 49.9 million dinars of capital, according to its annual report, which also said Viva would hold a special shareholders meeting in 2012 after losses topped 75 percent of capital to comply with local law.
That meeting has yet to happen, but its probable remit will be to approve a capital cut to alleviate the accumulated losses, a common practice in the Gulf.
"It will be difficult to get a listing with negative equity," said Shakeel Sarwar, head of asset management at Securities & Investment Co. (SICO) in Bahrain. "The only option available is to go for a rights issue to recapitalize the company."
The company would likely issue new shares, offering these to shareholders on a pro rata basis, meaning they could either pay more money into the company or have their holdings diluted.
STC would probably meet any shortfall, meaning its stake would increase from 26 percent at present. Zain did something similar earlier this year with loss-making affiliate Zain Saudi.
In 2008, Viva's IPO was 3.4 times oversubscribed with 916,000 investors each receiving 274 shares at 0.105 dinars per share, which may explain why shareholders have not been more vociferous in complaining about the listing delay.
"The individual investment is peanuts. They've almost forgotten about it," said Naser Al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait, adding Viva would likely restructure its capital in the first half of 2013.
Prior to the IPO, STC - the Gulf's No.1 telecommunications operator - paid SR 3.42 billion ($911.93 million) for its Viva stake, including the Kuwaiti firm's license.
"The shares look undervalued in terms of the IPO price," said Sarwar. 'Ideally, the amount of capital raised during the IPO should have been higher. If and when the company increases the share capital the valuation metrics will look different."
Viva may have been undervalued, but a worsening sector outlook could make investors pause.
"This year has been difficult for Kuwait operators. It's generally one of the more lucrative markets in the region with a rapid take-up of data, but a variety of factors have combined to make it a tougher market recently," said Nadine Ghobrial, EFG-Hermes telecoms analyst.
"Changes to government fee structures has impacted margins, the sector still lacks an independent regulator and competition intensity has increased."
UAE to loosen visa rules for investors and innovators
- UAE cabinet announces the launch of an integrated visa system to attract talent and talent in all vital sectors of the national economy
- The Council also announced changes in the system of foreign ownership of companies in the country, which allows the acquisition of 100% of the global investors by the end of the year
DUBAI: The United Arab Emirates, home to financial hubs Abu Dhabi and Dubai, is loosening its residency laws and will grant long-term visas for up to 10 years to investors and highly-skilled professionals.
The 10-year residency visas will be granted to specialists in science, medicine and research, and to “exceptional students.” The state-run WAM news agency says the plan aims to attract global investment and innovators.
The UAE Cabinet approved the new rules on Sunday, saying plans are also on track to allow foreign investors 100 percent ownership of their UAE-based companies this year.
His Highness Sheikh Mohammed bin Rashid Al Maktoum affirmed that the UAE will remain a global incubator for exceptional talents and a permanent destination for international investors. “The UAE has been open, governed by tolerance and contributed to by all who live on its land.
“Our open environment, tolerant values, infrastructure and flexible legislation offer the best opportunities to attract international investment and exceptional talent in the UAE,” he said. “Our country is the land of opportunity, the best environment for realizing human dreams and unleashing their extraordinary potentials.”
The new regulations include raising the percentage of global investors’ ownership in companies to 100% by the end of the current year. He directed the Ministry of Economy in coordination with the concerned parties to implement the decision and follow up on its developments and submit a detailed study in the third quarter of this year.
The new regulations approved by the Council of Ministers and the authorities concerned have also set the procedures for implementing them to grant investors residence visas of up to ten years for them and all members of their families, as well as granting residency visas of up to ten years for specialized competencies in the medical, scientific, research and technical fields.
The new regulations also include visas for students studying in the country for five years and a 10-year residency for exceptional students.
Under current laws, foreign companies must have an Emirati owning 51 percent of the shares, unless the company operates in a free zone. Major brands Apple and Tesla are believed to be exceptions to the rule.