Qatar Plans First IPO Since 2010

Mesaieed Petrochemical Holding Co, a unit of state-owned energy giant Qatar Petroleum, will conduct a QAR3.2 billion ($880 million) initial public offering of its shares in the local market next month, officials said on Sunday.

It would be the first IPO since 2010 in Qatar’s stock market, after the global financial crisis froze issuance.

Authorities want to revive IPOs as a way to develop Qatar, the world’s top exporter of liquefied natural gas, into a regional financial hub. For political reasons, the government also aims to use IPOs to spread more of its energy wealth among its citizens.

“We encourage citizens to take part in this investment and also to await other opportunities in the pipeline,” Energy and Industry Minister Mohammed Saleh al-Sada told a news conference.

Qatar plans to conduct IPOs worth QAR50 billion in its stock market over the next 10 years, he said. The tiny country has a population of about 2.1 million, roughly 250,000 of whom are local citizens.

The Mesaieed Petrochemical offer, open only to Qatari citizens, will be conducted between Dec. 31 and Jan. 21. Trading in the shares is expected to start in February, Finance Minister Ali Shareef al-Emadi said.

The offer price of the shares will be QAR10 each, plus listing costs of QAR0.2 per share; the IPO will comprise about 26 per cent of the company.

The offer is likely to attract solid demand, considering the strong performance of the Qatar market, said Marwan Shurrab, a fund manager and head of trading at Vision Investments, a regional firm. The main stock index is up 24 per cent year-to-date and near five-year highs.

“We’re expecting IPOs to come in 2014, which makes sense after Qatar’s year-to-date performance,” he said. “Companies are well-positioned to capitalise from that. IPOs in Qatar and other regional markets will be the main focus in mid-2014.”

Mesaieed Petrochemical holds stakes in ventures that manufacture polyethylene, caustic soda and other chemical products. Its partners in the ventures include the U.S. company Chevron Phillips Chemical Co.

The stakes held by Mesaieed Petrochemical generated total revenue of QAR4.3 billion and net profit of QAR1.6 billion in 2012, officials said.

The Qatari stock market, which has a capitalisation of about $150 billion, is preparing for a new influx of foreign money next May, when international equity index compiler MSCI has said it will upgrade Qatar to emerging market from frontier market status.

New stock listings would help the market absorb the funds. Emadi said foreigners would be allowed to buy a total of up to 15 per cent of Mesaieed Petrochemical in the secondary market.

The government will buy 750 of the company’s shares as a gift for each disadvantaged Qatari citizen – those receiving social insurance payments and people with special needs. Qatari citizens will be entitled to allocations of additional free shares in coming years if they keep the bulk of the Mesaieed Petrochemical shares that they buy in the IPO.