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IPOs and the national economy...

In the Sultanate of Oman, IPOs are not new. They are catalysts of growth of the national economy

Public offerings are one of the means of attracting local and foreign investments. This is how savings of citizens are deployed in investment vehicles which are beneficial for them. Therefore, countries and governments introduce public offerings of assets they own. They do this to expand the investment base, stimulate the economy and bring modern technologies. This is how they add governance to it and bring transparency by listing them on the stock market. Here, certain international standards of accounting are to be complied. There are requirements of higher level of disclosures, proper auditing and all these practices increase their performance and value. In IPOs, there is no way out except implementation of all these norms.

In the Sultanate of Oman also, IPOs are not new. They are catalysts of growth of the national economy. The government has sold some of its assets as public offerings. Private companies are also encouraged to be converted into public shareholdings. But the trend has changed recently due to certain reasons. This is why the Oman Investment Authority came up with an idea to deal with some of the assets of government-owned companies. The Authority could help achieve certain goals of Oman's Vision 2040, and promote economic diversification and attract foreign investments.

Perhaps the offering of 49 per cent of the shares of Abraaj Energy Services company for public subscription is a qualitative step which may help in supplementing some of the government's efforts aimed at attracting investments. Abraj Energy Services is one of the companies of the OQ group which is an integrated international company in the sector. This is also the first government company which has come out with IPO for subscription this year. This will lead to a massive increase in the economic diversification and the pace of growth. It is expected to enhance citizens’ orientation to invest whatever they have saved and add value to their savings. This marks a qualitative shift in their practices and approach from savings to investments.

There is no doubt that expanding the ownership base in government companies is part of the privatisation plan. This policy was formulated in the nineties. Many mechanisms were also made for the purpose.

The government is selling many of the companies owned by it. Before that, it did the same thing with Oman Cement, Oman Flour Mills and other companies by offering their shares for public subscription. This helped in attracting national and foreign investments. This approach will continue in the coming phase of development of the country in a more effective way. This will further enrich the national economy and strengthen the Muscat Stock Exchange with companies significant in different sectors.

If we take an objective view, we find that the energy sector stands at the forefront of the economic development of the country. The companies in this vital sector are extremely important in the Muscat Stock Exchange. They rejuvenate the sector by their presence in the share market and keep the wheel of the economic growth of the country moving. They attract more investments from within the country and abroad. It is noteworthy to mention that the Saudi Fund, Royal Court Affairs, and Schlumberger Investment company have entered into the market to purchase 40 per cent of the shares of Abraaj Energy Services. It increases the confidence of all its investors. This is a model which is worth to be followed by other sectors, particularly when it comes to attracting investments from abroad and expedite the development process in the country. This is an example of how new approach is successfully tested in the markets and which brings high returns. This has also encouraged many other investors and those who have recently started showing interest in investment activity to enter into the area and explore more such opportunities and multiply their wealth.

This is why it is necessary that we focus on such models of investments to move towards achieving the ultimate goals of Oman Vision 2040.

The mere entry of Abraaj Energy Services into the Muscat Stock Exchange is highly encouraging for the shares of other public and private sector companies. It has shown that this share market will feel rejuvenated and emboldened.

We hope that the idea of bringing more and more IPOs will be successful in the near future. This will open up more avenues for those within the country or abroad who are interested in investing money in the market. This is the ripe time for such activities in the country, and a model has been set by the Abraaj Energy Services and OQ group not only for the country to follow but for the entire region.

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