Barka Desalination Company SAOG (under transformation) or BDC, owner of Oman’s largest operating water desalination plant (Barka IWP), today announced its intention to launch its Initial Public Offering (IPO). The Company will offer 40 percent of its share capital to the public through an IPO. Accordingly, BDC will offer 30,208,800 shares to the public through listing on Muscat Stock Exchange (MSX). As anchor investors in the IPO, National Power & Water Co. LLC (an investment arm of Bahwan Engineering Group), and Bank Muscat SAOG have committed to invest upto 10% of the IPO at Bzs 145 per share i.e. the highest end of the IPO price range.
BDC has been promoted by global leaders with vast experience in water industry: ITOCHU Corporation from Japan, ENGIE and SUEZ from France along with WJ Towell Group from Oman. BDC caters to c. 23% of water demand in the Oman. BDC owned plant with proven desalination technology is a strategic asset located close to Muscat and is thereby a key water supply unit for Muscat city and northern part of the Sultanate.
BDC generates its revenues pursuant to a twenty year contracted water purchase agreement (WPA) until 2038 with the Government of Oman owned Oman Power & Water Procurement Company (OPWP), ensuring stable and predictable cash flows. Backed by this contracted WPA, BDC plans to offer the shares in the IPO on book-building basis in a price range of Bzs 115 to Bzs 145 which translates into an attractive dividend yield of 8.4% p.a. to 10.6% p.a. to IPO investors.
Barka IWP uses proven and reliable Sea Water Reverse Osmosis (SWRO) desalination technology providing environmentally friendly and sustained supply of high-quality drinking water at a record low electrical energy consumption. The Plant has achieved excellent operating performance with over 99% reliability in the last twelve months. It is worth noting that the Plant uses SeaDAF TM technology which helps it deliver water even in ‘algae bloom’ phenomena wherein other water desalination plants in Oman typically face technical complexities with respect to operations of their plants.
The IPO of BDC is going to be the first IPO in Oman under the Rules for Pricing Mechanism in Public Offering of Shares introduced by the Capital Market Authority (CMA) last year. The IPO of BDC will adopt several recent mechanisms in Oman, including a two-phased approach. Phase I will be an offer to large and institutional investors through a book-building method which is aimed at finding a fair value for the offer shares. This will be followed by a Phase II offer to the retail investors which is based on a fixed price and E-IPO for investor convenience. The CMA has designed the new rules with the aim of providing clear legal framework for determining fair offer price objectively and transparently.
Commenting on the proposed IPO, Patrick Thienpont, CEO of BDC said: “Barka Desalination Company officially commenced commercial operations in June 2018 after the remarkable construction of the Barka IWP plant, which was completed in less than 30 months. The IPO is a unique opportunity to invest in a strategic asset that will continue to be held and managed by the marquee founders. We look forward to welcoming new partners in our future journey.” BDC’s Chairman Murtadha Sultan said “Water is an essential commodity and a precious resource that forms the foundation of economic and social development in Oman. As the largest water supplier to the Sultanate’s desalinated water production, we are proud of our contribution to Oman. Investors have a rare opportunity to invest in the water sector in Oman through BDC’s IPO. We are confident that both institutional and retail investors will make the best of this opportunity”.
Bank Muscat Investment Banking, Oman’s largest and most experienced investment banking team, is the financial advisor and sole issue manager for the IPO transaction. BDC has also appointed a large collection syndicate for the IPO, consisting of five banks and two prominent brokerage firms who would be accepting application forms from potential investors in the IPO.