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Saudi mobile phone IPO 50 times oversubscribed
RIYADH, Oct 31
(Reuters) - Saudi Arabia's 1 billion riyal ($267 million) initial public
offering of shares in mobile phone operator Etihad Etisalat was 50 times
oversubscribed, the company said on Sunday. Chief Financial Officer Fayyaz
Siddiqui said 4.28 million investors -- around a quarter of the country's native
population -- applied for some 51 billion riyals worth of shares.
Twenty million
shares at 50 riyals each were offered to Saudis in the IPO that closed on Oct.
25. Investors will receive just 4.7 shares each because of the strong demand,
which is likely to encourage Saudi officials planning two more major IPOs before
the end of the year. Etihad Etisalat, a consortium led by the United Arab
Emirates' Etisalat telephone operator, won licences earlier this year to operate
Saudi Arabia's second GSM network and its first 3G system in the country of 24
million people, including foreign workers.
Etisalat bid
around 12 billion riyals to win a foothold in Saudi Arabia's potentially
lucrative telecoms sector, whose growth is likely to be fueled by the Gulf
state's windfall oil revenue and high population growth.
Samba Financial Group, which
organised the share issue, and two other banks kept branches open nationwide
through Saudi Arabia's Thursday-Friday weekend to try to meet demand. Traders
attributed the buying frenzy to the strong performance of the Saudi bourse over
the last 18 months, underpinned by record oil prices, healthy corporate results
and a surge of investor liquidity.
Most expect the 50-riyal
Etihad shares to soar in value. "Expectations are that they will reach 200
riyals in the short term. I think they will be trading at 300 in one month,"
said Abdulwahab Abu Dahesh, a senior economist at Riyadh Bank.
Saudi Arabia's telecoms
sector has been growing at 30 percent a year according to some analysts. The
world's biggest oil exporter also has the region's largest bourse, but only
Saudis are allowed to buy shares in IPOs. Gulf Arabs are able to buy stock in
some companies but other foreigners can only invest through mutual funds.
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