"Rocky Road Ahead" for Asiacell IPO

By John Lee.

Doubts have been expressed regarding Asiacell's ability to raise the record $1.27 billion planned in its forthcoming IPO (initial public offering).

According to a report from International Financing Review, observers are said there is a strong possibility the deal may not go through.

"The thing about these three Iraqi mobile companies is that they were required to IPO, but none of them want to IPO," said one ECM banker covering the region.

All three firms, Zain Iraq, Asiacell and Korek, failed to meet the original deadline of an IPO by August 2011 and fines were automatically triggered.

"The regulators are in a difficult situation. They can’t just cancel the licences and take all those phones offline," the banker said.

There were suggestions that there is not a strong enough investor base in Iraq to absorb a US$1.27bn deal, and there are question marks over the infrastructure capabilities of the Baghdad bourse.

And if local reports are to be believed, the transaction was mistakenly launched on a public holiday – anyone wanting to put in orders would have found the Iraq Stock Exchange closed for the day.

HSBC and Morgan Stanley were announced as managing the offer along with the Iraqi firm Rabee Securities, but Morgan Stanley withdrew last year after it became clear the deal’s distribution focus was to be almost entirely domestic. It remains an adviser to Asiacell's parent company, Qatar’s Qtel.

HSBC stayed, but when the intention to float was announced late last year it was no longer on the syndicate list and Rabee Securities was listed as sole bookrunner. A source close to the deal said HSBC also exited because of issues around local distribution.

Melak Iraq is advising the company.

(Source: International Financing Review)

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