Muscat City Desalination IPO opens for subscription

MUSCAT, NOV 18 – Muscat City Desalination Company (MCDC) SAOG (under transformation) has announced the opening of its Initial Public Offering (IPO) for subscription from today, November 19, 2017. Bank Muscat is the financial adviser and issue manager for the IPO.
The founding shareholders, who are leading international names in the industry, are selling these shares to the public to comply with their obligations in the Project Founder Agreement signed with the government of Oman.
MCDC is offering 54,442,640 offer shares at a price of 116 baisas per offer share (comprising a nominal value of 100 baisas, premium of 14 baisas and offer expenses of 2 baisas per offer share). The IPO represents an offer of 35 per cent of the share capital of the company.
The IPO opens for subscription today (November 19) and will close on December 18, 2017. The IPO is open for subscription to Omani and non-Omani investors including individual and institutional investors. In the IPO, 65 per cent of the shares made available for subscription have been reserved for investors applying for a minimum of 1,000 shares and a maximum of 500,000 shares, and 35 per cent of the shares have been reserved for investors applying for a minimum of 500,001 shares up to a maximum of 5,444,200 shares.
According to Subrina Thiagarajah, CEO of MCDC, the company (MCDC) has “steady and reliable cash flows with a stable business model based on a 20-year offtake agreement with Oman Power and Water Procurement Company (OPWP), which is owned by the government of Oman. The agreement is 33 per cent longer than the 15-year term given to power companies.
This would translate into cash flow visibility for a longer period for MCDC shareholders.”
She added that the plant operations and maintenance is contracted for 20 years to experts with international experience.
The company also benefits from marquee Project Founders — Malakoff International (Malaysia), Sumitomo Corporation (Japan) and Cadagua S A (Spain) — that are strong and experienced, having extensive expertise and demonstrated track record in the global water industry. Together, the Project Founders have experience in combine water production capacity exceeding 7.5 million cubic metre per day. The company’s management team is also highly experienced.
Tamer Cankardes, Vice Chairman of Board of Directors of MCDC said the company is the owner of Oman’s largest operating desalination plant, the Ghubrah Independent Water Plant (Ghubrah IWP) located in Muscat, with a total investment of more than RO 100 million.
The plant was commissioned in February 2016, with a 21-month successful operating records, hence the company has full operating assets, with no construction and commissioning risk. “MCDC contracted a water capacity of 191 TMC/day, making it the largest operating water plant in Oman. The plant, with a total capacity output to deliver 42 million gallons of potable water every day, provides approximately 24 per cent of total water capacity based in the Interconnected Zone and 60 per cent of the total water demand for Muscat city.”
He also added that the plant, based on globally proven and reliable seawater reverse osmosis technology, helps the company deliver uninterrupted water supply with minimum outages.
Seawater reverse osmosis technology-based desalination plant process is relatively simpler as compared to that of a power plant. “Key inputs are just seawater and electricity, hence there is no direct dependence and risk of gas allocation unlike in power plants.”
Cancardes reiterated that the plant is set to perform well once the Water Purchase Agreement with Oman Power and Water Procurement Company (OPWP) expires as it is expected to be competitive and well placed in the water demand and supply landscape.
The company has no outstanding liquidated damages with OPWP.

JOMAR MENDOZA