QLM Life & Medical Insurance Company (QLM), which recently announced a 60% initial public offering (IPO) at QR3.15 apiece to raise as much as QR659.4mn, has enjoyed continuous profits since its establishment over nine years ago, the company said. 
As a result, QLM has accumulated sizeable undistributed profits, reserves and surpluses on its balance sheet over and above its share capital. IPO investors will have access to these, resulting in an offer price with a premium over the historical book value, QLM said in a statement on Sunday.
In terms of global norms on IPO pricing, QLM stated that pricing IPOs at premiums to historical book values for businesses with successful track records is a common practice in the international capital markets.
Historically in Qatar, IQCD and Mannai were listed at a premium to their respective book values.
On its track record of profitability, QLM stated that it has been among the leaders in profitability in the regional insurance industry. Given its strong market footprint, dominant market share, unrivalled IT and operational platforms, and healthy capital position, the company is expected to continue to generate strong profits and distribute dividends to its shareholders in accordance with its dividend policy.
Comparing the conversion structure to the new company vehicle structure, the conversion structure applied in QLM’s IPO provides cost savings to investors as the offering and listing fees are lower, the company said.
According to QLM, the IPO will give eligible investors, namely, individual Qataris and companies registered with the Ministry of Commerce & Industry, the opportunity to invest in and share in the future success of Qatar’s largest life and medical insurance company.
Salem al-Mannai, Group CEO of Qatar Insurance Group and the authorised representative of QLM’s founding shareholders, noted: “Over the years, QLM has gained a major market share in the life and medical insurance business and has become one of the leading life and health insurers in the State of Qatar and the wider GCC region. This initial public offering is another milestone on the path towards achieving our growth trajectory.”
QLM’s management decided to launch the IPO for the following reasons: the company has reached operational maturity, is in excellent financial condition, and enjoys strong profitability and high dividend paying capacity;
QLM’s major shareholder, QIC, has been evaluating the option to IPO QLM and believes that now is the appropriate time for QLM from an operational and commercial standpoint; in addition, QLM is fulfilling the regulatory requirement to become publicly listed within a stipulated timeframe;
Global and local market sentiment has improved, with the QE Index currently trading at a positive year-to-date performance; and QIC and QLM’s other founders will retain a significant shareholding of 40% post-IPO, believing in the continued success of QLM.
To facilitate the offering, QLM will be directly converted from a limited liability company into a public shareholding company. More recent IPOs in Qatar used a different structure to offer the shares, which used a new company vehicle structure.
Based on the conversion, QLM’s share capital book value and number of shares will remain equal to the historical value. The company’s market capitalisation at IPO is QR1.099bn. The offer shares are accordingly being offered for subscription at QR3.15, consisting of the nominal value of QR1.00, a premium of QR2.14 and the offering and listing fees of QR0.01.
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