The attention of officials in the Sultanate of Oman these days is focused on keeping pace with the boom in initial public offerings (IPOs) taking place in the Gulf countries, the most important of which are in Saudi and the UAE.
It is expected that the Muscat Stock Exchange will very soon witness important listings, Soraya Al Balushi, Director of the Department of Economic Diversity in the country’s sovereign wealth fund the Omani Investment Authority, revealed.
Al Balushi said in a statement to Bloomberg a few days ago that the Sultanate aims to raise about $6.5 billion, as the agency exits from 30 projects leading to 2026.
Exiting investments is a procedure carried out by any investor, whether an individual or an institution, which is to exit the investment, partially or completely, by selling those shares to another local or foreign investor. This procedure ensures that the investor benefits from selling the stake and that the new investor benefits in developing the investment and playing a role in the strategic and financial aspects.
The agency, which was established by a Royal Decree in 2020, will before the end of this year, exit 6 investments in various sectors, by offering two units of the Energy Company (Okio), in addition to an industrial company, for public subscription.
This is in addition to selling shares, in whole or in part, in two projects affiliated with the “Asyad” group, and another affiliated with the “Omran Hotels and Resorts” group, according to Al-Balushi.
The agency recently announced a national extraction plan in the sectors of energy, industry, tourism, and logistics. The plan is expected to be completed within five years ensuring the exit of about 30% of its national investments.
With this plan, the agency aims to supplement the general budget with revenues from the sale of its shares in investments and to redirect part of the proceeds into new investments that result in the growth of the economy, the development of economic sectors, and the creation of new job opportunities.
This includes expansion of the Muscat Stock Exchange by offering a portion of those shares through IPOs.
The main goal of the agency is to implement the Sultanate’s 2040 vision, which aims to achieve economic diversification and reduce dependence on oil, and enable the private sector to lead the Omani economy.
The CEO of the Muscat Stock Exchange, Haitham Al-Salmi, had recently revealed that the stock exchange seeks to list 35 state-owned companies over the next five years, revealing that this plan will be presented in the second half of this year.
The offering of two units for “Okio” may be announced soon after the completion of the tender’s readiness, including its gas pipelines network, especially since sources announced about two months ago that Oman is studying several options related to the state energy company as part of the Sultanate’s support for its financial resources.
“Okio” is an integrated energy company, with interests in oil and gas exploration and production, refinery management, a retail network, and large petrochemical businesses. It was formed through the merger of Oman Oil Company with several companies, including the state-owned Oman Gas Company, the refinery group “Orpic” and the chemical producing company (Oxy).
Last December, Fitch Ratings revised the Oman Energy Company’s rating from “negative” to “stable”, confirming its rating at “BB-“. Okio contributed 4.4 percent of Oman’s GDP in 2019 and is one of the largest employers in the country with 6,600 employees.
High oil prices boost budget
The expected Omani IPOs come at a time when the Gulf states are witnessing an important boom in their financial markets and unprecedented public offerings that have succeeded in attracting large numbers of international investors.
According to Bloomberg data, the region raised $13.4 billion in the first five months of the year, more than in any other first half.
Oman has not had a major initial public offering since 2010 when telecommunications company Nawras, now known as Ooredoo Oman, raised $475 million.
The International Monetary Fund expected last week that the Sultanate’s GDP would grow by 4.5 percent and that it would achieve a fiscal surplus estimated at 5.5 percent this year, driven by the growth achieved by oil activities in the country.
The Ministry of Finance announced achieving a budget surplus in four months of this year amounting to 468 million Omani riyals, compared to a deficit of 828 million Omani riyals during the same period last year.
The rise in the price of a barrel of oil above $100 contributed to achieving a surplus in the Sultanate’s budget.
Oman, which gets 75 percent of its financial revenue from oil and gas products, according to Standard & Poor’s, has launched some reforms to diversify its revenue sources, including the imposition of a 5 percent value-added tax last year.