Oman’s OQ Gas Networks plans to sell 49% stake in an IPO

Pipelines business unit of state oil company set to list shares on Muscat Stock Exchange in October

There has been an IPO boom in the Middle East, with a number of companies listing their shares on the regional stock markets. Photo: Syed Ahmed

Oman’s OQ Gas Networks, the pipelines business unit of state oil company OQ, plans to sell up to 49 per cent of the company through an initial public offering and list its shares on the Muscat Stock Exchange.

The subscription period for qualified institutional and other investors in several countries as well as for retail investors in Oman is expected to start this month. It is subject to regulatory approvals from the Capital Market Authority of Oman, the company said on Monday.

It did not disclose the size of the offering.

“This listing will allow us to move the company into the next chapter of growth,” managing director Mansoor Al Abdali said.

“The core focus of OQGN will remain unchanged, focusing on the delivery of vital resources supporting the growth of our customers and the sultanate of Oman.”

The company said 70 per cent of the total offering will be made to eligible investors in Oman and qualified institutional and other investors in a number of countries, while 30 per cent will be for retail investors.

The listing is expected to take place in October this year, the company said.

OQGN holds a natural monopoly over Oman's natural gas transport infrastructure and is the exclusive owner and operator of the company’s natural gas transportation network.

The network involves a system of pipelines, metering facilities, compressor stations, gas supply stations and block-valve stations.

Last year, the company transported 39.4 billion cubic metres of gas from six producers to about 130 consumers through 4,031km of pipelines, supported by three compressor stations and 25 supply stations.

“The IPO of OQGN is part of a broader divestment programme envisioned by the government and being implemented by Oman Investment Authority – the integrated sovereign wealth fund of the sultanate of Oman,” said Talal Al Awfi, OQ group chief executive and OQGN chairman.

“This marquee offering is an opportunity for Omani and international investors to participate in Oman’s Vision 2040, the long-term national development plan that aims to make Oman a prosperous, competitive and sustainable nation and to rapidly diversify its economy.”

The company plans to adopt a semi-annual dividend distribution policy to its shareholders after the offering, it said.

It expects to pay the first dividend of 33 million Omani rials ($86 million) for the first nine months of 2023 around January 2024 and the second dividend distribution of 11 million rials for the last three months of 2023 around April 2024.

OQGN reported a more than 41 per cent rise in its first-half profit to 33.1 million rials as total income grew 16.5 per cent to 85 million rials.

OQGN is set to be the second IPO from its parent company OQ amid Oman’s privatisation programme as the Gulf region’s smallest oil producer continues to focus on the diversification of its economy.

In March, OQ floated its oil-drilling unit Abraj Energy Services after raising $244 million in what was Oman’s biggest listing in more than a decade.

"There was a diversification or privatisation plan that has been announced previously by the ultimate shareholder of OQ, Oman Investment Authority,” Mr Al Abdali told The National. “They are intending to privatise or to announce several privatisation of their assets in the coming five years.”

The company aims to expand its business and enter into hydrogen and “be a player in the CCUS (carbon capture, utlilisation and storage)", he said. It signed a preliminary agreement to "position the company as an infrastructure player for transportation of hydrogen", he added.

The company conducted several road shows in Europe, the Middle East, North America and Oman and received “great interest from a lot of investors either international or regional", for its IPO.

"We are now going for another deep dive type of investors roadshow,” he said.

However, he did not disclose how much the company plans to raise through OQGN's IPO.

The company’s total capital expenditure reached more than $120 million last year and is expected to grow about 3 per cent year-on-year amid expansion plans, he said.

BofA Securities, Bank Muscat and EFG Hermes are acting as joint co-ordinators on the transaction.

There has been an IPO boom in the Middle East, with a number of companies listing their shares on the regional stock markets such as the Abu Dhabi Securities Exchange, the Dubai Financial Market and Saudi Arabia’s Tadawul as economies recover from the coronavirus-induced slowdown on the back of higher oil prices and government reforms.

Middle East IPOs raised more than $23 billion in 2022 from 48 listings, compared with $7.52 billion from 20 offerings in the previous year.

That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.