Oman’s State-Run Energy Giant Pulls in $2 Billion from Landmark IPO
In a significant move for Oman’s economy, OQ Exploration & Production (OQEP), a subsidiary of the state-run OQ SAOC, raised over $2 billion in its initial public offering (IPO) on the Muscat Stock Exchange (MSX). This marks the largest IPO in the history of the sultanate, signifying not just a win for the energy sector but also a broader shift in Oman’s economic landscape, as the nation aims to diversify and stabilize its economy amid global economic changes.
OQEP’s IPO, which took place from September 30 to October 10, 2024, saw the company offering 2 billion shares, equivalent to a 25% stake in the firm. Priced at the upper end of the range, 390 baisas ($1.01) per share, the IPO garnered an impressive $2.03 billion in total proceeds. The company’s valuation now stands at approximately $8.1 billion.
“This has been a remarkable journey for OQEP and a clear demonstration of investor confidence in our business model and future growth potential,” said Ahmed Al Azkawi, the chief executive of OQEP. “We are pleased that investors have recognized our exceptional track record in value creation, operational excellence, and financial performance. We look forward to the next phase of growth as a publicly traded company.”
The listing attracted substantial interest, with aggregate demand reaching $5.4 billion, reflecting strong confidence in the future of Oman’s energy sector. Six anchor investors, including major institutional players, subscribed to 20% of the offering, signaling the deal’s prominence and the regional appetite for energy investments.
The shares are expected to start trading on the Muscat Stock Exchange by October 28, 2024, under the ticker symbol “OQEP.” This IPO comes at a time when Oman’s government has been taking bold steps to privatize state assets, allowing for more public involvement and capital inflows into the economy.
Oman’s Privatization Push
Oman’s ambitious privatization program is part of its broader Vision 2040 strategy, which aims to reduce the country’s heavy reliance on oil revenues. With global oil prices fluctuating, and the energy transition gathering pace, Oman is seeking to diversify its economy and generate more sustainable sources of income.
The OQEP IPO follows last year’s successful offerings of OQ’s gas pipelines business, which raised $749 million, and its oil-drilling unit, Abraj Energy Services, which brought in $244 million.
Privatization has proven to be a crucial part of Oman’s economic strategy. The government’s broader aim is to list several dozen state-owned enterprises in the coming years, including power utilities and logistics firms, in hopes of attracting foreign investment and enhancing liquidity in the domestic stock market.
In a statement, Oman’s Finance Minister Sultan Al Habsi emphasized that the IPO of OQEP marks an important milestone in the government’s efforts to rebalance the economy and attract international capital.
“The listing is a reflection of Oman’s commitment to pursuing its fiscal reforms, bolstering its financial sector, and achieving the objectives of Vision 2040. This IPO will support the government’s strategy to reduce its public debt and strengthen the fiscal foundation for future growth.”
The Gulf’s IPO Boom
OQEP’s IPO is part of a broader trend in the Gulf region, where governments have been capitalizing on strong energy prices and investor appetite for oil-linked assets. Over the past few years, several large IPOs have been launched, particularly in neighboring Saudi Arabia and the UAE, which have seen companies like Adnoc Gas Plc raise over $2.5 billion in 2023.
The Gulf’s capital markets have been thriving due to favorable conditions, including robust oil prices and pro-business reforms. As a result, firms in the region have collectively raised over $5 billion through share sales this year alone, excluding OQEP’s deal. The strong demand for OQEP shares indicates continued interest in energy assets, despite the geopolitical tensions affecting the broader Middle East.
Beyond Oman, other Gulf companies are preparing for public offerings. Etihad Airways, the flagship airline of Abu Dhabi, is reportedly considering a share sale, while LuLu Group International, a popular hypermarket chain, is exploring a dual listing. These developments further highlight the region’s growing prominence in the global financial landscape.
For Oman, the IPO of OQEP is more than just a financial transaction—it symbolizes a turning point in the country’s energy sector. As part of the offering, OQEP provided investors with access to a portfolio that includes 14 oil and gas exploration and production assets, both onshore and offshore, with service contracts across Oman. The company reported an adjusted revenue of 1.09 billion rials in 2023, and although it saw a slight dip in profits due to lower global oil prices, its future growth prospects remain promising.
OQEP’s success also underscores Oman’s delicate balancing act between maintaining its position as a key oil producer in the Middle East while advancing its efforts toward economic diversification. The Gulf state has been pursuing energy reforms aimed at boosting non-oil sectors, particularly in tourism, logistics, and technology.
Additionally, Oman launched a three-year fiscal stability program in 2022 to further diversify its economy and reduce public debt, which was exacerbated by the COVID-19 pandemic.
The successful listing of OQEP comes at a time of growing uncertainty in the Middle East, with escalating conflicts creating volatility in global markets. Despite these challenges, the appetite for Gulf IPOs remains strong, and Oman’s privatization drive appears to be on solid footing.
Information for this story was found via Bloomberg, The National, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.