Zain Iraq prepares for stock market IPO, hires investment bank

Following the US$1.3 billion Baghdad listing of Asiacell, the mobile operator partly owned by Ooredo of Qatar, Zain taken the services of Melak Iraq, an investment bank, to lead the company’s initial public offering of its subsidiary.

Zain Iraq’s investor relations head Saif Altimen stated that their need for “on-the-ground advisory and support in Iraq prompted the choice for Melai Iraq and Rabee Securities as lead adviser and broker because of their respective reputation.

Sources said that spearheading the public share sale of Zain Iraq is Melak Investments which is headed by Shwan Taha, Franklin Templeton’s former asset manager who is from Iraq.

With 32 million mobile subscriptions boosting of 93% mobile penetration in 2013, the Iraqi market is shared by three telecommunications companies: Kuwait’s Zain of Zain Group, Ooredo’s Asiacell and Korek, a subsidiary of Orange from France.

Matthew Reed, Informa Telecoms and Media’s principal analyst for Middle East and Africa stated that while there are operating obstacles in Iraq, the country has a significant telecoms market. Added Reed, this is important to Zain and Ooredo, Iraq’s giant mobile operators.

The operation in Iraq has gained Zain Group 40% of its first quarter revenues and may potentially grow mainly in data services upon the shift from 2G to the more sophisticated 3G services by the country’s mobile operators.

Hired in 2013 to work on the team were the Kuwaiti investment firm Markas and Akkadia Partners, a London-based adviser. Supporting them are National Bank of Kuwait, BNP Paribas and Citigroup. Leading the broker is Rabee Securities, an associate of Melak Investments.

The introduction of 3G services was approved in Iraq only recently. However, the government’s proposed right-to-offer-faster-connection fee of $307 million may meet some protest according to Mr. Reed.

After announcing that the company is likely to be market-ready by June, Zain postponed its mandatory IPO until the latter part of 2014. Korek Telecom claimed of huge losses when it failed to buy telecom operator Iraqna after Zain acquired it in 2007 and resulted in a $4.5 billion dollar lawsuit.

Under the 2007 terms of licenses, mobile companies in Iraq must comply in listing 25% of their shares. In March 2013, the IPO of Asiacell as led by Melak Investments increased to $9.2bn from a market capitalization of $4.6bn.

Listed in the Iraq Stock Exchange (ISX) are 91 companies, 45 licensed brokers and a revenue of $2 million dollars daily.

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