JEDDAH, 17 January 2006 — Some 50,000 Saudis are expected to visit Qatar this month to take part in Al-Rayyan Bank’s $1.1 billion initial public offering, the biggest ever in the Gulf Arab region.
Qatar National Bank, which is managing the IPO, has booked a stadium in Doha for the two-week offer period, and police will be on hand to control crowds expected to buy shares in a bank that says it will not be operational for at least eight months. “There is an extremely well-organized system in place here to handle all the applications, and things are running very smoothly,” said Mohamad Moabi, an official at Qatar National Bank, which is the only bank authorized to accept subscriptions.
Eighty percent of the issue is reserved for Qataris, and the rest is open to investors from the five other Gulf Arab states - Oman, Saudi Arabia, Kuwait, Bahrain and the United Arab Emirates.
As there is no system for electronic applications, Gulf investors must either travel to Qatar or send their passports through an associate. These constraints have caused chaos during some Gulf IPOs in the past. In September UAE police pushed back crowds of unruly investors clutching applications for the $560 million offering of energy firm, Dana Gas.
Abdullah Al-Ghamdi, director of customs at Salwa border point, said his department had completed preparations to receive large numbers of Saudis expected to cross to Qatar for the IPO. The flow of Saudi investors to Qatar in the past few days has been lower than expected because of Eid Al-Adha holidays. “The movement of passengers at Salwa has been normal during the past two days,” one official said.
However, Yousuf Sayyam, director of the subscription center at Qatar Sports Club Stadium, said nearly 50,000 people subscribed the bank’s shares on the first day with Saudis representing a good number of them.
Mazen Shaqarji, director of investments at Qatar National Bank, told Al-Watan that many Saudi banks were authorized to issue checks to prospective investors. They include National Commercial Bank, Samba Financial Group, Riyad Bank, Al-Rajhi Banking & Investment Corp., Banque Saudi Fransi, Saudi Hollandi Bank, Saudi Investment Bank and Bank Albilad.
The first day of Al-Rayyan’s IPO, representing 55 percent of the $2.06 billion company, was relatively quiet, partly because of the death of Kuwait’s emir on Sunday. “I think we’ll see more Kuwaiti and Saudi investors coming later this week,” said Moabi. Kuwaiti markets and government offices are closed for three days.
Investors were taking their own precautions, some holding several passports as they queued inside large tents set up in the stadium to apply for the 10 riyal shares. “One person brought 100 passports with him,” said Abdallah Khattab, one of the officials processing applications. “Things are going well now. I just hope everyone doesn’t turn up at the last minute.” Books close on Jan. 29.”
Qatar’s central bank has, meanwhile, given banks permission to lend to investors buying into initial public offerings, officials said on Sunday. A senior government official said the central bank had approved the plan in time for Rayyan IPO.
“Investors have to pay 33.3 percent and the bank puts up the remaining 66.7 percent,” said Parvez Khan, head of investments at Qatar’s Commercial Bank.