OQ Gas Networks announces intention to float on the Muscat Stock Exchange

Muscat: OQ Gas Networks S.A.O.G. (under transformation) (“OQGN” or the “Company”) today announces its intention to proceed with an initial public offering (the “IPO” or the “Offering”) and listing on the Muscat Stock Exchange (“MSX”), which is expected to take place in October 2023, subject to receiving the required regulatory approvals from the Capital Market Authority of the Sultanate of Oman (the “CMA”). The Company’s planned listing will allow investors to gain exposure to the exclusive operator and owner of the NGTN.

KEY DETAILS OF THE OFFERING

The Selling Shareholders expect to sell up to 49% of the total issued share capital of OQGN, with the Company and the Selling Shareholders retaining the right to amend the size of the Offering at any time before the end of the subscription period at their sole discretion, subject to applicable laws and the approval of the CMA. Immediately following the Offering, a minimum of 51.0% shareholding will continue to be held by OQ.

The Offering is being offered to eligible investors in Oman and qualified institutional and other investors in a number of countries (the “Category I Investors”) and retail investors in Oman (“Category II Investors”). Further information on the eligibility requirements for participation in the Offering will be available in the Offering Document upon its publication.

The Subscription period for Category I and Category II investors is expected to commence in September, after receiving the required approval from the CMA.

Shariyah Review Bureau (“SRB”) has issued a pronouncement confirming that, in its view, based on the circumstances as at the date of this pronouncement, the Offering is Sharia compliant in accordance with pertinent Sharia principles of the AAOIFI Sharia standards as of the date of this statement.

Admission of the Shares to trading on the MSX is expected in October 2023 (“Admission”).

DIVIDEND POLICY

The Company intends to adopt a semi-annual dividend distribution policy to pay dividends in cash after the Offer.

The Company expects to pay the first dividend distribution of OMR 33 million for the first nine months of 2023 around January 2024 and expects to pay the second dividend distribution of OMR 11 million for the last three months of 2023 around April 2024.

The Company currently expects to pay a dividend in respect of the fiscal year ending 31 December 2024, which will be the higher of 90% of the Company’s profit for the year ending 31 December 2024 or a 5% increase on the aggregate dividends paid for 2023.

For 2025, the Company expects to pay a dividend, which will be the higher of 90% of the profit for the year ending 31 December 2025 or a 5% increase on the dividends paid for 2024.

The Company’s ability to pay dividends is dependent on a number of factors, including the availability of distributable reserves, its capital expenditure plans and other cash requirements in future periods, as well as the necessary approvals.

Mansoor Al Abdali, Managing Director of OQGN, said: “OQGN, as the exclusive operator of the NGTN in Oman, provides critical infrastructure to deliver gas that supports the industries and economy of Oman. This listing, which we are proud to be conducting on the Muscat Stock Exchange, will allow us to move the company into the next chapter of growth. The core focus of OQGN will remain unchanged, focusing on the delivery of vital resources supporting the growth of our customers and the Sultanate of Oman. Our work is underlined by a commitment to reliability, efficiency, safety and sustainability. Together with our partners at OQ and OIA, we look forward to the listing and are excited by the opportunities it brings – to our customers, our investors, our employees, and the people of Oman”.

Talal Al Awfi, OQ Group CEO and OQGN Chairman, said: “The IPO of OQGN is part of a broader divestment programme envisioned by the government and being implemented by Oman Investment Authority (OIA) – the integrated sovereign wealth fund of the Sultanate of Oman. This marquee offering is an opportunity for Omani and international investors to participate in Oman’s Vision 2040, the long-term national development plan that aims to make Oman a prosperous, competitive and sustainable nation and to rapidly diversify its economy. The listing of OQGN, which owns and operates critical gas transportation infrastructure in Oman, is in line with this ambition while enriching the dynamically developing Omani stock market. We look forward to the listing on the MSX and are excited for what’s to come”.

DETAILS OF THE OFFERING

The Selling Shareholders intend to offer up to 49% of OQGN’s total share capital. Immediately following the Offering, a minimum of 51.0% shareholding will continue to be held by OQ. The Company and the Selling Shareholders reserve the right to amend the size of the Offering at any time prior to the end of the subscription period in their sole discretion, subject to applicable laws and the approval of the CMA.

All the shares being sold by the Selling Shareholders are existing ordinary shares and the Company will not receive any proceeds from the sale of the shares in the Offering, all of which will be paid to the Selling Shareholders. The Offering expenses will be paid by the Selling Shareholders.

The Offering will be conducted in the manner approved by the CMA and will be offered in two tranches, being carried out concurrently as defined below:

–  Category I Offer represents 70% of the total Offering (out of which 30% of the Offer Shares have been reserved for Anchor Investors) and will be made to eligible investors in Oman and qualified institutional and other investors in a number of countries

–  Category II Offer represents 30% of the total Offering for retail investors.

–  If the aggregate demand in Category II is less than 30% of the Offer, then after full allocation to the Category II investors, the balance of the shares shall be made available to Category I investors, if there is oversubscription in Category I.

Details of the Offering will be included in the Offering Document which is expected to be published by the Company prior to subscription opening. The completion of the Offering and Admission of the shares to trading on the MSX is expected in October 2023, subject to market conditions and obtaining relevant regulatory approvals in Oman, including approval of Admission.

The shares held by the Selling Shareholders following completion of the Offering shall be subject to a lockup which starts on the date of Admission and ends 180 calendar days thereafter, subject to customary exceptions and waiver by the Joint Global Coordinators. The Company will also be subject to a lock-up starting on the date of Admission and ending 180 calendar days thereafter.

Shariyah Review Bureau (“SRB”) is a Shariah Advisory firm licensed by the Central Bank of Bahrain. It has issued a pronouncement confirming that, in its view, based on the circumstances as at the date of this pronouncement, the Offering is Sharia compliant in accordance with pertinent Sharia principles of the AAOIFI Sharia standards as of the date of this statement. The pronouncement is not intended to be and does not constitute a legal, financial, or investment advice and SRB shall not bear any liability in this context. Investors are advised to conduct their own due diligence and consult with their own Sharia advisors before making any investment decisions based on the pronouncement.

Bank Muscat S.A.O.G., BofA Securities and EFG-Hermes UAE Limited (acting in conjunction with EFG Hermes UAE LLC) have been appointed as Joint Global Coordinators, and Bank Muscat has been appointed as Issue Manager.

OVERVIEW OF OQGN

OQGN holds a natural monopoly over the essential gas transportation infrastructure in Oman and is the exclusive owner and operator of the NGTN, serving critical roles in Oman as the asset owner, operator and maintenance and transportation provider of gas through the NGTN. The NGTN is a comprehensive gas transportation network encompassing a system of pipelines, metering facilities, compressor stations, gas supply stations and block-valve stations. The NGTN serves as an essential link connecting gas producers with gas consumers operating in various essential sectors requiring gas as a critical production feedstock or for power generation, such as liquefied natural gas (“LNG”), power generation and water desalination, oil and gas and industrial and commercial (e.g., petrochemical, fertiliser, aluminium and steel plants).

The Company transports gas, through the NGTN on behalf of the Shipper, which buys gas from gas producers and sells it to gas consumers. At present, there is only one Shipper, IGC, although additional Shippers may be introduced in the future. In 2022, the Company transported 39.4 BCM of gas, from six gas producers to a diverse consumer base of approximately 130 gas consumers through approximately 4,031 kms of gas pipelines, supported by three compressor stations and 25 gas supply stations, providing uninterrupted gas supply in 2022.