Iraq telecom operator to try for IPO again

Asiacell is seeking to tap Iraq's wealthy diaspora as the telecommunications company based in Kurdistan attempts to revive stalled plans to go public.
The Iraqi operator, 30 per cent-owned by Qatar Telecom, has appointed BNY Mellon to advise on how to attract international buyers as it prepares for an initial public offering (IPO) of 25 per cent of its shares on the Iraq Stock Exchange.
"The company and its advisers believe a listing of this scale would drive renewed interest in the exchange from international investors, but principally from the wider Iraqi public," said a source close to the company (Asiacell) who asked not to be identified, adding the Iraqi public were not used to a deal of this size,
This would be the first foreign share listing in the country's recent history.
Plans to list three Iraqi telecoms companies - Asiacell, Zain Iraq and Korek, an affiliate of France Telecom - stalled earlier this year, having missed an initial deadline to float by the end of August, which was required as part of their licence agreements.
BNY Mellon is in favour of the listing of depositary receipts on an as-yet undecided foreign exchange in a bid to kick-start the listing process.
Depositary receipts allow investors trading on international exchanges to buy bundles of stocks in companies based overseas. They can also raise capital from mutual funds, which may be unable to invest on overseas exchanges because of their mandates.
They are cheaper and require less disclosure than secondary listings, while also benefiting from the additional liquidity of a fully-developed stock exchange.
In the case of Iraq's telecoms companies, doubts had been raised about whether the Iraq Stock Exchange was sufficiently developed to support their flotation.
The idea of the IPO from the government's point of view was to share the wealth with the people. However, the pricing issue has been the main subject of dispute, said Sherif Salem, the manager of the US$20 million (Dh73.4m) Iraq Opportunity Fund at Abu Dhabi's InvestAD.
"The only way to get the best solution would be a local IPO at a cheaper valuation for local investors, while institutional investors will have to pay a premium which is closer to its fair price," Mr Salem said.
The market capitalisation of the entire Iraq Stock Exchange is $4 billion, compared with a market value for each of the telecoms companies of about $4.5bn, said Peter Gotke, the regional head of depositary receipts at BNY Mellon.
"We can appeal to a dispersed and relatively wealthy Iraqi diaspora," he said. "We think depositary receipts would be a great fit for the telecoms companies." Following decades of conflict and internal repression, Iraqis around the world numbered about 4 million in 2007, according to the UNHCR, the UN Refugee Agency. Many have settled in the US, Canada and Europe, although most remain settled in the Levant region.
Iraq's telecoms market is relatively underserved, with 75.78 mobile phone connections for every 100 inhabitants last year, according to the latest available data from the International Telecommunication Union.
By contrast, the UAE has 145.45 mobile subscriptions for every 100 people.
Asiacell's IPO is being managed by HSBC, Morgan Stanley and Rabee Securities, an Iraqi brokerage.
The Rabee Securities Iraqi Dinar Equity Index has risen 30.8 per cent since the start of the year, making Iraq's stock market the third best-performing worldwide after Venezuela and Mongolia.
ghunter@thenational.ae
halsayegh@thenational.ae
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