MUSCAT, JULY 2 - Dhofar Generating Company (DGC) SAOG (under transformation), announced the opening of its Initial Public Offering (IPO) for subscription. The company is the owner and operator of the Salalah II IPP and is currently the largest power supplier in the Dhofar governorate. The founding shareholders are selling these shares to the public to comply with their obligations in the Project Founders Agreement signed with the Government of Oman. DGC is offering 88,896,000 offer shares at a price of 259 baisas per Offer Share (comprising a nominal value of 100 baisas, premium of 157 baisas and offer expenses of 2 baisas per offer share). The IPO represents an offer of 40 per cent of the share capital of the company.
The IPO opened for subscription on July 1, 2018 and will close on July 30, 2018. 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 100,000 shares, and 35 per cent of the shares have been reserved for investors applying for a minimum of 100,001 shares up to a maximum of 8,889,600 shares.
At the IPO price, the company offers an average projected dividend yield of 7 per cent for the first five years (excluding issue expenses). The first dividend of 9 baisas per share is expected to be paid in February 2019 and 9 baisas per share to be paid in August 2019 with twice yearly dividend declaration thereafter. At the offer price, the company offers an IRR of 11 per cent — 13 per cent to the investors.
Bank Dhofar — Investment Banking Division is the ‘Issue Manager’ and EFG Hermes UAE Limited is the ‘Global Coordinator and Bookrunner’ for the transaction.
DGC (or Salalah II IPP) comprises of two power generation plants with a combined contracted capacity of 718 MW, located at Raysut in the Dhofar Governorate of the Sultanate of Oman. The original plant, which commenced commercial operations in 2003 has a contracted capacity of 273 MW. The founding shareholders acquired DGC in June 2015. A second new 445 MW plant was developed by DGC with commercial operations commencing as per schedule on January 1, 2018.
The company is now the largest power supplier in the Dhofar Governorate, with its total contracted power capacity representing approximately 61.74 per cent of the total contracted capacity in the Dhofar Power System. The company has a world-class safety record with zero LTI since acquisition featured with stable and efficient growth while achieving 69.2 per cent Omanisation.
The founders of the Company are well reputed global leaders with an established track record in the global and regional power industry: Mitsui & Co Ltd, ACWA Power and Dhofar International Development & Investment Holding Company SAOG.
On the occasion of the opening of the IPO, Naif al awaid, CEO of DGC commented, “The DGC IPO is a compelling investment opportunity in a company that is powering Dhofar — one of the largest governorates of the Sultanate of Oman. It also promises to take DGC into the next level of success. The company benefits from a marquee shareholder group, robust agreements with the government including OPWP and the umbrella of the AER, with stable and predictable cash flows that support the strong investment case. The Company also benefits from fully operating assets, with no construction and commissioning risk, and a strong track record of safety, reliability and localisation.”
Oman Observer is now on the WhatsApp channel. Click here
