JEDDAH, 8 December 2004 — The National Company for Cooperative Insurance (NCCI), the Kingdom’s sole licensed insurance company, will make SR1.435 billion by selling 70 percent (seven million) of its shares to Saudis at the rate of SR205 per share during a two-week-long initial public offering scheduled to start on Dec. 21. “It has been decided to float all the state-owned shares in NCCI as well as part of the shares owned by the General Organization for Social Insurance (GOSI) and the Pensions Corporation for public subscription,” said Finance Minister Dr. Ibrahim Al-Assaf.
“The price for a share has been fixed at SR205 and has been approved by the Financial Market Authority,” the Saudi Press Agency quoted the minister as saying.
He said subscription forms have been made available at all commercial banks for the IPO, adding that the lowest limit for subscription is 10 shares. “Every Saudi individual has the right to subscribe to this number of shares and members of the same family can use a single form,” he pointed out.
Applicants must attach the original and a copy of their IDs, Al-Assaf said, adding that the subscription would be restricted to Saudi individuals. Agents are allowed to purchase shares on behalf of up to 10 persons.
The shares on offer include 50 percent of NCCI’s capital owned by the Public Investment Fund as well as 20 percent of the capital owned by GOSI and the Pensions Corporation. The two organizations would jointly retain 30 percent of their shares with each having 15 percent stake. NCCI officials said they expect a rush by subscribers to buy the shares. Muhammad Al-Kharashi, governor of the Pensions Corporation, described the flotation of NCCI shares as a positive step that would help motivate investment and expand the privatization base.
Last month the IPO of Ettihad Etisalat, the new Saudi mobile phone company, was oversubscribed 51 times, reaching a whopping SR51 billion ($13.6 billion). Twenty million shares were on offer at SR50 ($13.3) each, totaling SR1 billion ($266.6 million). But the number of applicants reached a staggering 4.28 million.
The NCCI IPO comes as part of the government’s drive to privatize state-owned enterprises. Plans are under way to privatize 20 major sectors including air transport, water, electricity, mining, telecommunication, civil aviation, highway management, railways, sports clubs, municipal services, health services, desalination plants as well as operation and management of social service centers, employment services and agricultural services.
