news blog from Tova

UPDATE 1-Qtel’s Iraqi unit picks banks for IPO

DUBAI Oct 12 (Reuters) - The Iraqi affiliate of Qatar Telecom , Asiacell, has picked HSBC and Morgan Stanley to manage its initial public share offer, the unit’s chief executive said on Wednesday.”We confirm that we chose these two banks to be the joint global coordinators and lead managers,” Diar Ahmed, CEO of Asiacell, told Reuters on the sidelines of an investment event in Iraq’s semi-autonomous Kurdistan region organised by local brokerage Rabee Securities.”We are happy that we are making great progress on this issue. As for the timing of offering the IPO, we cannot give an actual date yet,” Ahmed said.Four sources familiar with the process earlier told Reuters that banks had been picked for an IPO lined up for next year.While Asiacell and two other Iraqi telecom companies — Korek Telecom, part-owned by France Telecom and logistics firm Agility , and Zain Iraq, a unit of Kuwait’s Zain — were required to list 25 percent of their shares before August, the commissioner of Iraq’s Communications and Media Commission said last week it did not expect any offerings until mid-2012.”All three operators are in dialogue with the regulator, and they are trying to find a suitable roadmap which doesn’t overload the system,” one of the sources said.”It is all about the fine balance between being late on the deadline and, even if they were ready, going public in an environment where they price at a reasonable rate.”Last year’s listing of Nawras , Oman’s second mobile operator, whose majority shareholder is also Qtel, encountered a similar situation.The terms of its licence dictated it needed to list 40 percent on the Muscat Securities Market by February 2010 but the regulator granted it an extension due to volatile equity markets, and the IPO was completed in October 2010.There has never been an Iraqi bourse IPO structured like a Western offering, with a roadshow and then a period of bookbuilding before final pricing.The format of Asiacell’s IPO has yet to be decided, but one of the sources said discussions were taking place around whether to use the book-build method.Another option for Asiacell would be a fixed price offering, which is easier for investors to understand but makes it harder to judge valuation properly, making shares liable to big jumps on the first day of trading.The size of the three listings are set to be much larger than any other stock on the Iraqi bourse.The combined freefloats would be worth around $5 billion but the current daily turnover on the Iraqi exchange was around $1.5 million, Ghada Gebara, the chief executive of Korek Telecom, told Reuters last week.”You can’t have listings from the same sector and the same country on top of each other as it damages investor demand, so it would be better if the regulator gave all of 2012 to get the three deals done,” the first source said.Zain Iraq said last month it has also begun the process of changing to a shareholding company.It has appointed BNP Paribas , Citigroup and National Bank of Kuwait to run its offering, three of the sources said.Meanwhile, Korek Telecom has yet to invite banks to pitch for its IPO, the sources said.