Tag Archive | "National Bank of Kuwait"

Zain Takes Step towards IPO

By John Lee.

Zain Iraq has moved a step closer to launching its mandatory initial public offering (IPO), by establishing a new holding company in Iraq through which it will list 25 percent of its shares on the Iraq Stock Exchange (ISX) towards the end of the year.

The new company, named Al-Khatem Telecommunications, floated 55.9 million shares on June 4 for one Iraqi dinar per share. The subscription period will last 30 days.

According to a report from The National, once this IPO is complete, the company can proceed with the 25 percent share offering for Zain Iraq.

Wael Ghanayem (pictured), the chief financial and operating officer at Zain Iraq, said:

If you look at our growth in Iraq, we believe the IPO will be attractive and there will be good demand for the stock … This is the second IPO, people are more educated about the processes.

Zain Iraq has hired Citigroup, the National Bank of Kuwait and BNP Paribas as advisers for the offering.

The company, with about 14 million subscribers, recorded a profit of $369 million last year, up 6 per cent from 2011.

It issued the following official statement on the move:

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ISX Clarifies Custody Situation

By Mark DeWeaver.

On March 3, the ISX posted the following notification on its website:

“No institution or competent body has requested a license to act as custodian pursuant to Decree No. 17 of 2012.

“Therefore, the Depository Centre remains the sole body conducting the transfer of securities from the account of the investor [registered] with the Centre to the account of the investor [registered] with the broker and vice versa in accordance with the procedures and applications of electronic trading on the Iraqi Stock Exchange.

“Please be advised of the above and [of the fact that] the Board of Governors has a plan to encourage Iraqi and non-Iraqi financial and banking institutions who wish to provide this service.”

(The original Arabic version is available here. Hat tip Ali Albazzaz for this excellent translation.)

This took me a bit by surprise. As I wrote in my last post, National Bank of Kuwait (NBK) seems to be all set to start custodying Iraqi shares. Fellow Iraq fund manager Ali Albazzaz and I also coauthored two articles that mentioned NBK’s custody breakthrough–one for the Financial Times “Beyond Brics” blog, the other for the Emirates leading English-language paper, the National.

Has the ISX contradicted our story? Well, not really. We were wrong about NBK’s subsidiary Credit Bank of Iraq (BROI) having a custody license. They actually have a letter of authorization from the ISX Board of Governors. Thus, BROI’s authorization comes from the ISX rather than the Iraq Securities Commission, which issues licenses.

But does this make any difference to the foreign investor?

Given that custodians do not usually take over the functions of depository centers, it is also unclear what the second point in the notification signifies. Presumably the Iraq Depository Center (IDC) would transfer shares among depository center accounts in any case. Is the ISX simply making sure everyone understands that NBK will not be replacing the IDC?

Finally, what is the Board of Governors’ plan to encourage those who wish to provide this service? Will the ISX be using Letters of Authorization as a means to do this, as the case of NBK might suggest?

Given the importance of the custody issue to foreign investors, it would be helpful to have a bit more clarity on what the ISX is trying to tell us.

Posted in Investment, Mark DeWeaver on Investments and FinanceComments (2)

NBK Makes Custody Breakthrough

By Mark DeWeaver.

In a move that is likely to mark the start of a new era for the Iraq Stock Exchange (ISX), National Bank of Kuwait (NBK) has begun offering custody support services for ISX-listed shares through its 80%-held subsidiary Credit Bank of Iraq. This is arguably the most important step forward for the ISX since the implementation of electronic trading in 2009. At last the door is open for large institutional investors to enter the Iraqi market. (See this post for more on the significance of the custody issue.)

Credit Bank of Iraq received a letter of authorization to offer custody support services at the end of last year and just “went live” in January. So far the business has focused on custodying shares from the Asiacell IPO but they are now set up to custody all the existing names as well.

NBK will be an acceptable counterparty both for institutional investors and (as a subcustodian) for global custodians. With about US$ 58 billion in assets, it is Kuwait’s largest bank and also one of the largest in the Middle East. It has also been on Global Finance magazine’s list of the world’s fifty safest banks for the past six years and is the top rated bank in the region. In addition, NBK’s custody services now cover not only Iraq but also the GCC and Egyptian markets—an important consideration for institutions looking for a “one-stop shop.”

With a custodian of this caliber on board, the ISX is now in a position to mobilize significant amounts of foreign capital. This is important not only because the listed companies will have greater access to financing but also because increased participation by international investors will incentivize the introduction of best practices at local financial institutions. NBK’s custody breakthrough is thus a breakthrough not only for the Kuwaiti bank and its clients but for Iraq’s capital markets as well.

Posted in Investment, Mark DeWeaver on Investments and FinanceComments (5)

Zain Iraq Plans IPO by July

John Lee.

Zain Iraq‘s Chief Financial Officer, Wael Ghanayem (pictured), has told Bloomberg that the company plans to list 25 percent of its shares on the Iraq Stock Exchange  (ISX) by the end of June.

But Geoffrey Batt, managing director of the $44 million Euphrates Iraq Fund, told the news agency:

A more realistic estimate is Zain will be positioned to list about six months after they convert to a joint stock company … At the moment, they need to overcome too many procedural hurdles to list by June 30.

The share sale plan follows the successful IPO of rival Asiacell, which started trading in Baghdad earlier this month.

Zain Iraq is in the final stages of converting into a shareholding company, and has hired Citigroup, National Bank of Kuwait and BNP Paribas as advisers for the offering. The company’s profit climbed 6 percent in 2012 to $369 million and it expects “double-digit” growth this year, Ghanayem said.

Korek Telecom, part-owned by France Telecom, must also sell 25 percent of its shares on the bourse to comply with it license requirement.

(Source: Bloomberg)

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Zain Iraq Invests $20m to List on Stock Market

Iraq’s biggest mobile phone operator, Zain Iraq, has invested about $20 million in its efforts to list on the local stock exchange, according to a report from Reuters.

Chief executive Emad Makiya told the agency:

We have invested a lot of money. We have invested over $20 million in this. We have hired lawyers, we have brought (in) bankers … There are so many processes involved, so many things. It is not as easy as you think.

Zain has appointed BNP Paribas, Citigroup and National Bank of Kuwait to run its offering.

As part of the $1.25 billion operating licence it won in 2007, the company was required to list on the Iraq Stock Exchange (ISX) by August of last year, but along with rivals Asiacell and Korek it failed to do so.

The first step for the three operators is to convert to shareholder-owned companies and then obtain approval from the ISX board and Iraq’s securities commission, but so far only Asiacell has transferred into a shareholders’ company.

Zain, which has about 12.5 million subscribers, announced on Thursday that it had dropped prices for all its tariffs in Iraq, lowering the price for all calls made between 8am and midnight by 30 percent.

Makiya said he was hopeful the mobile phone company would be granted a 3G operating licence this year and said that it planned to market more aggressively in the autonomous northern Kurdish region, where it only started operation in early 2011 and lags behind its competitors.

“Our entry into Kurdistan was a bit late, but that doesn’t mean we are going to stop investing,” he said.

(Source: Reuters)

Posted in Telecoms/CommsComments (1)

2 of the 3 Mobile Telcos Select Banks for IPO

Asiacell has selected HSBC and Morgan Stanley to manage its initial public offering (IPO) on the Iraqi bourse, according to Bloomberg.

Chief Executive Officer Diar Ahmed told the news agency that the company will offer 25 percent of its shares, but did not specify when.

The company, which is an affiliate of Qatar Telecom, is in talks with Iraqi authorities to complete the listing procedures and set a timeframe, he said.

According to regulations, it should also convert from a limited liability company to a shareholding company before listing on the stock exchange.

Along with its two competitors, Zain and Korek Telecom, it was due to trade 25 percent of its shares on the Iraq Stock Exchange by the end of August, according to the terms of its licence.

Reports were unclear as to whether the three companies will be fined for missing the deadline.

Reuters reports that Zain has also begun the process of changing to a shareholding company, and  has appointed BNP Paribas, Citigroup and National Bank of Kuwait to manage its IPO, while Korek Telecom has yet to invite banks to pitch.

Iraq has 23 million mobile-phone subscribers, according to the Communications and Media Commission.

(Source: Reuters, Bloomberg)

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Citigroup Hires Diplomat to Spearhead Iraq Expansion

Bloomberg reports that Citigroup, the U.S. bank which earns about a $1 billion in revenue from the Middle East, has hired a former U.S. diplomat to oversee its team in Iraq as the holder of the world’s fourth-biggest oil reserves rebuilds its economy.

“We are very optimistic about Iraq over the next three to five years,” Dennis Flannery, who will run the division, said in an interview from Amman, Jordan yesterday. The country will have “considerable wealth” from its oil exports and is poised to invest in the oil and gas industry, power generation and housing to boost growth, he said.

Flannery, aged 64, was the financial attache at the U.S. embassy in Baghdad for a year before joining Citigroup in March. He has worked at the Inter-American Development Bank, the U.S. Treasury and the World Bank, and will oversee Citigroup’s plan to provide services to banks, international and state-owned companies in Iraq, the bank said in a statement. He will be based in Amman.

“Over the last year, Iraq’s security situation has improved very steadily,” Flannery said. Over a longer period, the lender may have “branches, a consumer business, a middle- market business” as well as a full-service bank in the country,” he said.

Citigroup already has some operations in Iraq, where it provides letters of credit for banks, private banking services as well as payment and cash-management services to international corporate clients.

It will seek to expand its trade finance and syndicated lending services to some of  Iraq’s 44 public and private banks, he said. Citigroup is also in talks with the government to advise on finance projects in the oil, gas and power industries, as well as housing developments.

Citigroup will operate from Jordan for the moment, although it has options to open a representative office in Iraq, Flannery said. The New York-based lender could apply for a branch license or buy a stake in an existing bank, he said.

HSBC Holdings Plc, Europe’s largest bank, purchased a 75 percent stake in Baghdad-based Dar Es Salaam Investment Bank in 2005. Standard Chartered Plc and National Bank of Kuwait, the Persian Gulf country’s biggest bank, secured licenses to operate in Iraq in 2004, becoming the first group of overseas banks to enter the country since nationalization in 1964.

(Source: Bloomberg)

Posted in Banking & FinanceComments (1)

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