The initial public offering (IPO) market in Qatar is all set to witness drastic changes as companies wishing to go public will soon have a book building regime in place, it is learnt.
“As far as we understand, the talks (at the highest level) have been held regarding this,” a market source said, adding an announcement is imminent.
This development comes in the backdrop of the meeting between the Qatar Stock Exchange and the Qatar Financial Market Authority (QFMA) last month regarding the offerings and listings.
The book-building is the process by which the offering adviser submits an evaluation to the company wishing to make an IPO to a group of qualified investors (including but not limited financial services firms, state institutions and state-owned companies).
Book building is one of the mechanisms the QFMA intends to work with as part of mechanisms for evaluating companies wishing to make public offerings of their shares to investors, the QFMA had said in its latest annual report.
Unlike the present system, where the demand could be assessed only at the time of closing of the subscription of an IPO; the book building route is dynamic as it gauges the demand as the book is built, sources said.
“The book building is an efficient tool of price discovery. It is one of the missing blocks that the exchange needs to get into the developed market status,” an analyst with a leading global advisory firm said.
This move comes especially in view of as many as three maiden offers that are currently being discussed in the country.
The QFMA said many advantages have been added to the draft rulebook and has been circulated for market consultation and the advantages include new mechanisms to conduct the IPOs such as book building as well as a ‘price stability fund’ to protect individuals and small investors.
Indications are that two maiden offers are on the tap in the near term. It is learnt that top QSE officials had a meeting with one of the leading family-owned entities that is into realty and agriculture. Earlier, there were reports that Rayan bottled water firm may seek a listing.
Market sources are of the view that nitty-gritties have been hammered out and the companies could either “list directly or follow the book building system”.
To strengthen the primary market, the QSE official said, FOCs or family-owned companies, which constitute 90% of the private sector firms, need to enter but they are rather “shy”.
The FOCs represent a large untapped market for future listings which will help in diversifying the country’s capital market, analysts said. Investment Holding Group (IHG) had come out with its IPO in 2017, making it the first family business in Qatar to go public through a maiden offer.Last updated: October 18 2020 11:27 PM
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