RIYADH, 19 December 2002 — The first two days of the flotation of 30 percent of Saudi Telecom has been slow as expected but is still likely to be oversubscribed, bankers said yesterday. The initial public offering (IPO), the largest in two decades, involves some 90 million of the company’s 300 million shares in a deal that will generate more than $4 billion for state coffers.
"The response in the first two days of the IPO has been more than modest as was expected. People will tend to wait until the last week of the three-week process," one banker said. "The expected end-result is that the offering will be oversubscribed by two to three times," the banker told AFP.
Demand by Saudis to buy the shares on offer was expected to increase once civil servants receive their monthly pay nine days from now. Local banks which receive the subscription applications are offering soft loans to citizens and interest-free loans to their employees to encourage them to participate in the IPO.
Twenty percent of the shares go to Saudi citizens while the remaining 10 percent will be sold to two public pension funds.
Hanan Al-Zeer, Arab News staff, adds:Many Saudi women have complained of difficulties in buying STC shares. The irritants are: a) The stipulation that they should have a legal representative to buy shares for their children, and b) the need to produce a certificate of identification from one of the relatives if the applicant does not have an ID.
Female bank employees described day one of the STC flotation as a weak day. Only a few people showed up to buy the shares because the bank hours are in conflict with the office hours of private and pubic sector employees. Some women have been put off by the fear of competition from telecom companies when they enter the market in the future and the possibilty of a war on Iraq.
A manager of one of the branches predicted that many women will show up in the future to buy the shares, especially on the last day — Jan.6.
One of the difficulties they face is the fear of entering the stock market. They prefer to hold more cash in their hands TO spending it on stocks. A woman employee at the Saudi British bank said that the possibility of a war on Iraq is scaring many women away.
An STC statement said many women visited banks to buy shares. Noof Al-Debeky, manager at the Arab National Bank, said the STC flotation drew many women because of the reliability and attractiveness of the stock.
Nurah Al-Harbi came to the bank early and bought 60 stocks for herself and 40 for her sisters. She said the assistance she got from the bank made it easy for her to buy the stocks, the press statement said..
Monerah Al-Harithi, a housewife, said that she will buy 200 shares. She is determined to enter the stock market. Al-Harithi predicted that the share price will rise 50 percent from the first month, and it may double in the future, the STC statement added. Each share is being sold now at SR170.
