MUSCAT: Al Ahlia Insurance, which floated its OMR7.5 million Initial Public Offering (IPO) on July 4, aims to offer an attractive 9.3 per cent dividend yield for the first four years.
The first dividend of 11 baisas is expected to be paid by the company in August-September, 2017, with semi-annual dividend distributions thereafter.
The company’s 25 million share offer (which represents 25 per cent of the company’s paid-up capital) at 300 baisas per share will close subscription on August 2. The allotment notices will be dispatched on August 16, while the listing of shares on the Muscat bourse will commence on August 17. Addressing the media, Anwar Ali Sultan, chairman of Al Ahlia Insurance, said; “Al Ahlia has the backing of reputed promoters: RSA Insurance Group, the multinational insurance group that has a legacy of over 300 years; Ominvest, one of the long established investment companies in the Gulf; W J Towell Group, the oldest business groups in Oman; and the OHI group, a premier business house in Oman. The promoters will continue to hold an aggregate of 75 per cent shares post-IPO and will continue to ensure reliable management and governance of the company.”
The company has been holding several one-on-one meetings with key investors, collecting banks, research analysts and brokerage houses.
About 65 per cent of the offered shares have been reserved for small investors applying for a minimum of 1,000 shares to a maximum of 250,000 shares, with the remaining 35 per cent reserved for large investors applying for a minimum of 250,100 shares up to a maximum of 2,500,000 shares.
“The offer has attracted significant interest among the investor community in Oman, which supports the key highlights of the offering: international parentage from the RSA group, distribution and technical strength, financial outperformance high standards of corporate governance and an attractive investment opportunity with a dividend yield that compares well to the peers in the industry,” said Lloyd East, regional chief executive officer, RSA Middle East and managing director of Al Ahlia Insurance.
“We believe that Al Ahlia has several strategic competitive advantages,” added East.
The company, which has a market share of 14.4 per cent, has a well-developed multi-channel distribution network in Oman, which includes 25 branches and strong co-branded relationships in the motor affinity segment.
Al Ahlia plans to further diversify its distribution channels by increasing its focus on digital channels with the launch of a transactional website and to complement its online sales services.
The company also has a strong broker presence, along with a number of longstanding directly serviced corporate commercial accounts.
Al Ahlia is one of the two general insurance companies in Oman to have consistently delivered underwriting profits, as well as positive investment income since 2011.
Also, valuations across the market are depressed, which offers an opportunity for investors to acquire shares in Al Ahlia at an attractive offer price.
Further, the insurance penetration level in Oman is around 1.6 per cent, which offers potential for growth potential in the country. “Our estimate allows for a 5.2 per cent compounded annual growth rate in insurance market, supported by an increasing population,” noted East.
The middle class and middle-aged components of the population are growing and they are going to be increasingly digital.