Oman’s state energy company, OQ SAOC, is gearing up for a groundbreaking initial public offering (IPO) that could raise approximately $2 billion from its exploration and production division. This move is poised to be the largest IPO in Oman’s history and could reshape the landscape of Gulf investments.
Major Valuation and Stake Sale
According to sources familiar with the situation, the IPO will value OQ Exploration & Production SAOG at around $8 billion. OQ plans to sell a 25% stake in this pivotal unit, marking a significant step in its growth strategy. While details on the valuation are still under wraps, the announcement has already generated considerable interest.
Promising Dividends to Attract Investors
To entice potential investors, OQ has committed to paying out $600 million in annual dividends from 2024 through 2026. Additionally, the company plans to offer performance-linked dividends equivalent to 90% of cash flow after investments in 2025 and 2026. This strategy mirrors successful practices seen in other major energy companies, such as Saudi Aramco, and reflects OQ’s commitment to delivering value to shareholders.
Market Context: Navigating Global Challenges
The IPO announcement comes at a critical time when Brent crude oil prices recently dipped to their lowest levels since 2021, raising concerns over global demand. As members of the OPEC+ producers’ group, Oman, Saudi Arabia, and the UAE have been working collectively to manage production levels and stabilize the market.
A Surge in IPO Activity in the Gulf
The Middle East has witnessed a surge in IPO activity recently, bouncing back from a summer lull. Various sectors, including a perfume maker, flour millers, and an oil services provider, have all announced their listings. So far this year, firms have collectively raised just under $4 billion through Gulf exchanges, and experts believe this momentum will continue.
Oman’s Broader Privatization Strategy
Oman is actively pursuing an ambitious privatization strategy, with plans for multiple listings over the coming years. OQ has engaged Morgan Stanley and local banks to facilitate the IPO of its methanol and liquefied petroleum gas unit, further diversifying its offerings.
Trading on the Horizon
Shares of OQEP are expected to start trading on the Muscat Stock Exchange in October, with major financial institutions like HSBC, Natixis, Sohar International Bank, and Oman Investment Bank coordinating the sale. This IPO represents a significant opportunity for Oman to bolster its capital markets and attract international investment.
A Step Towards Emerging Market Status
As part of its broader economic strategy, Oman aims to upgrade its capital markets to emerging market status. This IPO and others planned in the pipeline, including listings for the state power utility and logistics firms, are integral to this goal.
OQ’s forthcoming IPO not only marks a milestone for Oman but also signals a vibrant and evolving investment landscape in the Gulf region. The upcoming trading could pave the way for more opportunities, attracting both local and international investors.
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