Investor Interest In Zain Bahrain IPO May Be Muted
Zain Bahrain could list up to 15% of its shares on the stock exchange after it received government approval to launch an initial public offering (IPO), according to local media reports. BMI predicts a weak response from investors, particularly foreign investors, in view of the operator' weakening position in the Bahraini telecoms market and the prospects for more attractive IPOs in the region .
Kuwait-based Zain Group has a 56.25% stake in Zain Bahrain. Other shareholders in the company include Zain Bahrain's chairman, Sheikh Ahmed bin Ali Abdulla al-Khalifa, UK-based Vodafone Group and a government pension fund, according to regional research firm Zawya. Zain has not provided details on the IPO, including the possible new ownership structure and the timeframe for the completion of the process. However, local media reports suggest the listing would likely be on Bahrain's bourse.
BMI believes a number of unfavourable factors could dampen investor interest in the IPO. Perhaps the most notable factor is the much expected IPO by Zain Iraq, expected to take place in 2013. The Zain Iraq IPO, which could mirror the hugely successful Asiacell IPO, promises significantly higher returns, despite Iraq's elevated political risk profile. The Iraqi telecoms market is grossly underserved, with voice and data penetration far below regional averages. This, along with ongoing economic reforms in the country, will ultimately drive growth in the telecoms sector through strong corporate and consumer demand for higher value services. Meanwhile, Zain Iraq is the largest telecoms service provider in the country, putting it in a strong position to take advantage of growth opportunities in the market.
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