Asiacell Goes for “Smallest IPO” Record

Asiacell has launched what may be the world’s smallest ever public offering, raising about US$ 8,500 through the sale of 10,000,000 shares at IQD 1 each. The subscription period started on September 14 at the Baghdad and Sulaimaniya branches of Al-Shamal Finance and Investment Bank and will continue for up to sixty days.

Obviously this is not the long awaited IPO called for by the conditions of the company’s operating license. That would require the sale of a 25% stake. With share capital of 270 bn, Asiacell would have to be selling 67.5 bn shares.

The current micro-offering is merely a preliminary step to convert the company to joint-stock status. I don’t know why this couldn’t be taken care of as part of the actual IPO. My guess, for whatever it’s worth, is that the existing shareholders might otherwise have to do the entire offering at par (IQD 1).

As I understand it, the Company Law (Article 154), requires new shares to be issued when a company converts to joint stock form but does not allow for these to be sold for more than their IQD 1 par value. Once the conversion has happened, however, Article 55/4 says that new shares “may be offered at a price equal to or greater than their nominal value…and priced in light of the company’s performance.”

If I’m right, two separate offerings would make sense. In the first, you try to set the record for world’s smallest IPO, selling only a tiny number of shares at par. Then you do the real IPO, selling the shares for what they are actually worth.

6 Responses to Asiacell Goes for “Smallest IPO” Record

  1. Hal Miran September 21, 2011 at 1:21 am #

    Al Shimal aka North Bank

  2. DeWeaver September 21, 2011 at 5:05 am #

    Hi Hal: Thanks for pointing that out. I was wondering why I hadn’t heard of that bank before.

  3. EMMETT September 27, 2011 at 3:53 pm #

    MARK WOULD CARE TO COVER ANY STORIES ON US INVESTORS INVESTING THE IRAQ STOCK MARKET. SEEMS LIKE THE INVESTOR WITH UNDER 5,00 USD CAN’T FIND ANY EXPOSURE…

  4. DeWeaver September 27, 2011 at 7:47 pm #

    Emmett: Unfortunately I don’t know of any way to invest with under USD 5,000. Rabee Securities has a USD 100,000 limit and the funds I’ve heard of can’t accept anything under 10K. The other possiblity is Karmal Securities. I don’t know if they have a limit or not.

  5. Andy September 29, 2011 at 7:34 pm #

    Mark, if I physically have dinar and decided to put it in the ISX how would you recommend doing so?

    I see the post from Emmett…is it impossible to invest less than $5,000.00 USD?

  6. DeWeaver September 30, 2011 at 1:08 pm #

    Andy: It can’t be impossible to invest less than $5,000. That would mean there couldn’t be any local retail investors. It’s more a question of whether or not there are any local brokers a foreigner could deal with that would accept this amount. As for physical dinar, I have no idea.