Dana Gas Initial Public Offering (IPO) coming up. How many times oversubscribed will this one be ?
Press release doesn't appear to say one way or another if it will be open to expats.
Press Release 20 August 2005:
Dana Gas is to float Dh2.1b IPO in September
DUBAI - Dana Gas (DANA), the new regional natural gas company incorporated in the UAE will float a Dh2.1 billion initial public offering in mid-September, the Founders Committee of the company announced.
The committee, which held a meeting on Wednesday, reviewed the progress of the recent Founder Placement and plans for the IPO and future listing of the company. The meeting was attended by Shaikh Sultan Bin Ahmed bin Sultan Al-Qasimi, Deputy Chairman, Sharjah Petroleum Council; Hamid Jafar,Chairman & CEO, Crescent Petroleum; Adel Khalid Al-Sabeeh, Chairman of Kuwaiti National Industries Company and former Kuwaiti Oil Minister; Shaikh Khalid Abdulrahman Al Rajhi, CEO, Abdulrahman Saleh Al Rajhi and Partners Co. Ltd. and Varouj Nerguizian, General Manager, Bank of Sharjah (BOS).
The Committee formally approved the share allotments in the recent Founders Placement, which closed in late July with strong regional demand from the approximately 250 prominent institutions, and reputable individual investors who were invited to participate from across the Gulf region. The Committee discussed and approved plans for the Dh2.1 billion IPO, planned for mid-September, including the timetable and allotment policy. It also ratified the appointments of professional advisors, including related fees and expenses.
Dana Gas will be the first private sector, regional gas company to be publicly-listed. It will start with existing assets in the gas sector and has plans to undertake projects and investments in this growing sector across the Gulf region and the Middle East. The company was granted formal Preliminary Approval by the Sharjah Economic Department and the UAE Ministry of Economy and Planning on July 27, and is expected to post earnings from the first year of operations. HSBC (Middle East) is acting as the company's Financial Advisor and Lead Manager.
I forgot I started this topic . I'll add the stuff I posted elsewhere...
Gulf News 15 September 2005:
Dana Gas plans to list shares on Abu Dhabi and regional bourses
By Stanley Carvalho, Staff Reporter
Abu Dhabi : Dana Gas (DANA), the first regional private sector gas resource company, will list its shares on Abu Dhabi and other regional stock exchanges, a top company official said.
The company's Dh2.06 billion initial public offering (IPO) opens on September 20 and closes on October 2 following approvals from the regulators.
The IPO represents 34.33 per cent of the company's capital.
"Dana Gas plans to list its shares on the Abu Dhabi Securities Market (ADSM) with subsequent co-listings on other exchanges in the region to follow," a top official of the Founders Committee told Gulf News.
Shaikh Ahmad Bin Sultan Al Qasimi, Deputy Ruler of Sharjah and Chairman of the Sharjah Petroleum Council, has been named Honorary Chairman of the company, and the first board of directors has been appointed with representation from all GCC countries.
They are Hamid Dhiya Jafar (Executive Chairman), Dr Adel Khaled Al Sabeeh (Vice-Chairman), Shaikh Sultan Bin Ahmad Bin Sultan Al Qasimi, Shaikh Adib Abdullah Al Zamil, Ahmad Rashid Al Arbeed, Dr Tawfeeq Abdul Rahman Almoayed, Shaikh Khaled Abdul Rahman Al Rajhi, Khaled Nasser Al Misnad, Rashad Mohammad Al Zubair, Ziad Abdullah Galadari, Abdullah Nasser Al Mansoori, Shaikh Abdulaziz Hamad Al Jomaih, Majid Hamid Jafar and Varouj Nerguizian.
"Nearly a third of the offering, totalling Dh700 million, has been reserved for small investors who are citizens of the GCC.
"Each investor in this tranche will receive a planned guaranteed allocation of 3,000 shares in the public offer.
"To be eligible for the allocation in this tranche, small investors must apply for a minimum of 5,000 shares, with the maximum application fixed at 75,000 shares."
The other portion of the IPO totalling Dh1.27 billion will be allocated to wholesale investors of all nationalities.
Application amounts from Dh150,000 to Dh2.06 billion will be permissible, and shares will be allocated in this tranche on a pro-rata basis.
Separately, 90 million shares have been set aside for allocation to charitable causes.
The shares offered in the IPO are priced at Dh1 each plus the customary one fils per share to cover costs.
HSBC is the financial advisor and lead manager for the IPO.
Ten banks have been appointed as the IPO receiving banks.
They are:
Abu Dhabi Islamic Bank (ADIB)
Abu Dhabi Commercial Bank (ADCB)
Union National Bank (UNB)
First Gulf Bank (FGB)
Mashreqbank (MASQ)
Dubai Islamic Bank (DIB)
Emirates Bank International (EBI)
HSBC
Bank of Sharjah (BOS)
United Arab Bank (UAB)
The founders have already subscribed to 65.67 per cent of the company's Dh6 billion capital, and comprise more than 300 prominent individual and institutional investors from throughout the GCC, including members of ruling families, reputable business groups, financial institutions and government investment agencies.
Dana Gas is being established in Sharjah with existing assets in the supply, transportation, processing and marketing of natural gas.
It plans to expand in this rapidly growing energy sector throughout the Gulf and the wider Middle East, including into upstream exploration and production, and downstream into refining and gas-related industries.
Yes well, read on (welcome to ShareWadi by the way )...
the following comments I had originally posted Thu 15 Sep 2005 in a different topic (deleted now)...
Dana Gas IPO
A 6 bn dh company? Sounds like a lot.
Double page spread advertising DanaGas IPO in Gulf News today as well as the above article. There's a website quoted for more information and online applications (www.ektetab.ae) but it doesn't load for me at the moment - Network error given.
Also tel number at HSBC ME 800404446 or +97143680307. HSBC is lead bank for this IPO. HSBC information about IPO is on uae.hsbc.com
Other banks include (ADIB), (ADCB), (UNB), (FGB), (MASQ), (DIB), (EIB), (BOS), (UAB). Should be a few extra coins in the kitty for them from this IPO although remember back in May 2005 when 4 banks had their hands slapped for going over Central Bank leveraging limits for IPOs (they had extra interest deducted)? How will it affect this one? Central Bank limit is up to 5x leveraging.
So, thinking about this one, here's my two fils worth ...
I phoned HSBC number, long message with information, then an option to get more recorded information, then press 0 to get a real person. Whoever I spoke to was pretty helpful. Now here's a potential scenario based on random guesses and information received.
For Nationals or maybe GCC citizens, there's a guaranteed minimum allotment of 3000 shares so you can subscribe for just that amount and be pretty sure you'll get them.
For foreigners, you can only register as a wholesale investor, that means minimum 150,000 shares. And there's no guaranteed minimum allotment, so the oversubscription problem looms its head.
HSBC will leverage up to 5x if you're a premier account holder (need 350,000 dhs investments or cash with them), less leveraging if you're not one of the hoi polloi and have to set up websites to try and earn money for the next shawarma bill . Maybe other banks will have easier ways of getting the 5x leveraging. HSBC will leverage 3x if you invest 100,000 dhs yourself, or 2x if you invest less.
Share subscription fee is 1% paid up front.
Last few IPOs have opened around 7-9 dhs per share (except for ARMX, it was about 4).
So let's apply for the minimum 150,000 dh investment, sell everything when company goes public and see how we go (I did a similar calculation for the ARMX IPO a while ago and wasn't that impressed - they were 80x oversubscribed in the end).
Subscription fee is 1% or 1500 dhs.
If leveraging of 2x is used, need 75,000 dhs and borrow 75,000 dhs.
Interest on 75,000 borrowed for 2 months (a guess) is probably about 1% per month minimum or 75,000 x 2 x 0.01 = 1500 dhs.
Bound to be a setup fee of a couple hundred dhs (I forgot to ask), let's say 300 dhs.
Total costs over the 75,000 dhs invested are 1500 + 1500 + 300 = 3,300.
Now, for that you're subscribed to 150,000 shares but based on past IPOs, you're not likely to get anything like that. AMLAK was 33 times oversubscribed a couple of years ago. More recently (TAQA, ALDAR, AGTHIA) IPOs have been hundreds of times oversubscribed - max was 800x for Aabar Petroleum this year, an amount greater than the GDP of the UAE. Hence the Central Bank reaction. So let's assume that reaction has calmed things down a bit and Dana Gas IPO is only 100x oversubscribed. That means you're likely to get 150,000 / 100 = 1500 shares at 1 dh each. Couple of articles about the Central Bank reaction here:
And if you sell them for 7 dhs each when company goes public, you'll get 7000 dhs (I'll ignore broker fee of 80 dhs) less the 1500 dhs you had to pay for them so your profit is:
7000 - 3300 - 1500 = 3200 dhs. Not bad for filling in a few forms eh? Or is it ?
Remember that you've tied up your 75,000 dhs for two months. That's a fairly sizeable whack of cash. And it might be longer than two months - although they say flotation expected asap after closing subscription. Note that RAK Properties still hasn't listed yet (as of 15 September 2005), and their subscription was back in May 2005 or so. I hope people have at least had the surplus cash refunded by now.
That assumes that shares open at 7 dhs. What if they only open at at 4 dhs? TAQA floated this week and opened at 8 or 9 dhs - sounds good for a 1 dh share. But rumors persisted before hand of 15-20 dhs on opening and I heard one comment that people were offering 10 dhs per share before opening. My point being that expectations and reality don't always match up.
That also assumes 100x oversubscription. A pretty wild guess at best but I think it's very unlikely it will be as low as it was for AMLAK, and that was still 33x. It might also be higher (personally, I think it's more likely to be higher than 100, not lower).
But still, if it is 33x, then you might get 5000 shares for your efforts. Of course that might also indicate the demand is not so great, and the shares open much lower than 7 dhs per share. Lets say 3 dhs per share. Sell them for 5000 x 3 = 15,000 dhs, less costs of 3300 dhs and 5000 dhs for the shares and you get a tidy profit of 6,700 dhs. Now that sounds a bit better doesn't it ? Hmmm... don't forget you've got to find that 75,000 dhs initially.
OK, if you can come up with 75,000 dhs, how about selling that other car and making it 100,000 dhs. Then you'd get 3x leveraging from HSBC and we get something like this (applying for 300,000 shares).
Costs are 3000 fees + 4000 interest + 300 setup = 7300 dhs.
Shares received is 300,000 / 100 = 3000.
Sell at 7 dhs, get 3000 x 7 = 21,000 dhs.
Less costs, 21,000 - 7300 - 3000 dhs for the shares = 10,700 dhs profit.
Yes, well a bit over 10% return on your money for two months is not bad. But it still all very risky. Is the risk vs return worth it? I'll leave you to answer that here and/or point out any holes in my thinking.
Or if anyone finds a bank that will go to 5x leveraging without the minimum balance requirement like HSBC has, let me know. That might make it more interesting .
Put in 30,000 and borrow 120,000 to subscribe for 150,000 shares and get 1500 share...
7,000 sales - 1500 fees - 2400 interest - 1500 share cost - 300 setup = 1300 dhs. Yahoo!!!
Hmmm, let's sell your all your cars, put in 100,000 and borrow 400,000 to subscribe for 500,000 shares. As before assume 100 x oversubscribed and get 5000 shares.
Ok, how about selling that villa on the Palm and starting with 1,000,000 dhs? Borrow 4,000,000 dhs, subscription amount is 5 m shares, get 50,000 shares.
350,000 sales - 50,000 fees - 80,000 interest - 50,000 share cost - 300 setup ~170,000 dhs. That's better. Can anyone lend me a villa ?
I'm assuming that the subscription fees of 1% are paid on the applied for number, not the allotted number since I don't know what is correct. If you only pay on the allotted number, then profits look a bit better.
As a final note or word of warning. It's not uncommon for IPOs in other more mature markets to open at less than the subscribed for price. Imagine you leveraged your 100,000 to 300,000 dhs, the IPO was fully subscribed only so you got total allotment of 300,000 shares, and then it opened at 0.80 fils. You could sell them all for 240,000 dhs, pay the bank the 200,000 dhs and you'll have made a hefty loss of 67,300 dhs on your original investment . If you keep them, you'll be paying the bank 2000 dhs a month to do that as interest on the loan.
And the brokerage fee will be more like 800 dhs, just for that final kick in the teeth... _________________ UAE IPO list | posting guidelines
I guess your right. I heard of one guy who subscribed to another IPO
for a massive amount of money only to actuley get 0.25% of the shares
and he was a well connected local. Many Thanks
Yes, well if a well connected Emirati struggles to get very many, then what hope have those with less wasta ?
There's two ways it might work.
1. If you are Emirati, you and everyone vaguely related to you signs up for the 3000 share minimum allotments. If you have several children, maybe you can sign them up also?
2. The Central Bank wrist slapping after the last IPO has a greater than expected effect at calming things down and you end up with it only being 10 or 20 times oversubscribed.
I said before that a low rate of oversubscription might indicate that demand wasn't as great. I disagree with myself now - demand might still be just as high if the lower rate of oversubscription is due to banks being more strict with their leveraging allowances. It would be useful to find out just how much leveraging was actually possible previously. Any ideas? _________________ UAE IPO list | posting guidelines
Joined: 25 Aug 2005 Posts: 231 Location: Somewhere in the Gulf
Posted on Tue 20 Sep 2005 15:52 by sharepunter
Website for DANA gas is now working.
From a business point of view it looks ok. They have assets and a plan.
Allocations are problematic but they could be a good payer over the longer term
Yes, I'm inclined to think it's one of the better opportunities but the biggest problem is getting a decent chunk of shares out of it. Here's some more commentary from gas-matters.com (exact date unknown)...
Gas Matters 20 September 2005:
Middle East’s first private regional gas company to be launched in UAE
A new gas company, Dana Gas (DANA), has been formed in the United Arab Emirates by a consortium including the Emirate of Sharjah, Crescent Petroleum and partners from Saudi Arabia, Kuwait, Bahrain, and the UAE. The company will have a wide shareholder base from across the Gulf region, and aims to tackle projects in the growing regional gas sector, while forming alliances and partnerships with both State-owned energy enterprises of the region as well as with international gas companies.
Starting with capital of $1.6 billion, Dana Gas will be the region’s first private-sector gas company to offer shares to the public. It will start with substantial assets in the gas chain, including long term gas supply commitments from Crescent Petroleum’s offshore production, underpinned by a 25-year gas supply agreement with the National Iranian Oil Company (NIOC). It will also own offshore and onshore pipelines in the UAE, and gas processing facilities, all with long-term throughput agreements already in place.
The company has initial off-take agreements with the UAE Federal Electricity and Water Authority (FEWA), the Sharjah Electricity and Water Authority (SEWA), Dubai Natural Gas Company (DUGAS), and various industrial customers including Oman Chemicals and Pharmaceuticals. Initial supplies through the system will be 500 MMcf/d, with capacity to expand up to 1 Bcf/d. Dana Gas is therefore immediately qualified to be a major regional gas company and expects profitability from its first year of operations.
“A very important rationale for the company is that it is regional in both scope and ownership, and that it is private-sector driven”, company sources told GM. “There is a significant trend throughout the Middle East for an increasing role for the private sector across all industries and this combines with the high liquidity caused by high oil prices and also the 9/11 effect, under which Middle Eastern investors are seeking to repatriate their investments and are experiencing very good returns at home.” For example, a recent IPO in the UAE by Aabar (AABAR), the region’s first private oilfield services company, was 800 times oversubscribed.
Because Dana Gas is private, with wide regional participation, it should be seen as neutral, and therefore able to navigate more easily through local sensitivities, avoiding problems like those experienced in the Qatar-Kuwait gas scheme, which encountered obstacles due to Saudi Arabia’s refusal to let the pipeline cross its territory and waters. Our sources added that the company will be well placed to capitalise on burgeoning demand for gas in the region, driven by industrial development and rising power generation requirements.
Part of the founders’ inspiration came during the Saudi gas initiatives, when local firms were noticeable by their absence from bidding because none of them could meet the prequalification criteria set by Saudi Aramco. Dana Gas hopes to participate in future initiatives, and has already identified several other opportunities throughout the Gulf region and into the Mediterranean Basin, in areas ranging from upstream development, through to transportation, marketing and downstream industries. The company’s strategy combines acquisition, new business development, and a desire to partner with other gas companies undertaking projects in the region.
Dana Gas will be operating in the context of a large and growing gas deficit in the Middle East, Iran and Qatar excepted, which has meant that a region once viewed solely as a source of supply is now increasingly viewed as a significant gas market in its own right. Low regional prices in the range $0.75 – $2.50/MMBtu, combined with high population growth and the rise in international prices of end-products, have driven this trend. Saudi Arabia for one has been forced to freeze its gas supply commitments to new users until it finds more reserves.
The main driver behind a gas demand growth rate of 10%/year in the Gulf is power generation. On the other hand, Asian energy demand has pushed many industrial users to build factories and plant in the Gulf to capitalise on low gas prices, good business infrastructure and proximity to both reserves and markets, a trend which should guarantee “limitless opportunities” for the gas business, according to our source.
Dana Gas has been set up as a public joint stock company with a capital of UAE dirhams 6 billion ($1.6 billion). The original founding partners of the company have been joined by around 250 select individual and institutional investors from across the region, who were invited to participate in the pre-IPO private placement, successfully closed in late July after a strong response. The UAE Ministry of Economy and Planning granted regulatory approval on July 27.
The founders of the company have already subscribed for 65% of Dana Gas’ capital, and the remaining 35% will be sold in an Initial Public Offering (IPO) scheduled for mid-September, with the plan to list the shares on one of the UAE’s stock exchanges. The company’s Articles of Association state that citizens of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) must own at least 51% of the company’s capital, with the remaining 49% open to investors from other countries.
HSBC has been appointed as Financial Adviser for the company and Lead Arranger for the offering, which our source said gave the company enhanced credibility with investors. The International Finance Corporation, part of the World Bank Group, has been appointed Corporate Governance and Best Practices Adviser.
Joined: 19 Aug 2005 Posts: 13383 Location: up the wadi without a paddle
Posted on Sat 24 Sep 2005 17:00 by sharewadi
Reports are that Saudi investors are coming over to Dubai en masse to buy into the Dana Gas IPO. Apparently all flights from Saudi to Dubai are fully booked for the duration of the IPO subscription period.
Any guesses as to the times oversubscribed now? Maybe several hundred? _________________ UAE IPO list | posting guidelines
According to the Gulf News this IPO was heavily oversubscribed with chaos at the banks with so many people trying to get a piece of the action.
SW's analysis of the situation seems about right. With this oversubscription how many shares would you get if you did raise 150k? Probably < 1 percent??
Joined: 25 Aug 2005 Posts: 231 Location: Somewhere in the Gulf
Posted on Mon 26 Sep 2005 14:13 by sharepunter
If these articles are accurate then 200x oversubscribed is not out of this world. Therefore 1/2 of one percent will be the allocation.
Keep your powder dry
Joined: 19 Aug 2005 Posts: 13383 Location: up the wadi without a paddle
Posted on Mon 26 Sep 2005 23:19 by sharewadi
share punter wrote:
If these articles are accurate then 200x oversubscribed is not out of this world.
I read a comment somewhere that it was up to 200x oversubscribed so far. Er, sorry, I mean that there was no comment regarding a question asking if it was true that it was up to 200x oversubscribed so far.
So I guess it's up to about 200x oversubscribed so far ...
Use your money to buy cheap shares this week instead as the IPO sucks funds out of the market. _________________ UAE IPO list | posting guidelines
Joined: 19 Aug 2005 Posts: 13383 Location: up the wadi without a paddle
Posted on Sun 23 Oct 2005 13:15 by sharewadi
In the end, it was 140x oversubscribed, and it seems like local investor allotments will be revised from about 3000 share each to 1750 or so.
Expect more action in local markets later this week and next week as surplus cash is refunded to subscribers... _________________ UAE IPO list | posting guidelines
Now this must improve liquidity and people are using the boom word again.
The "Boom" word eh? Well, the Dana IPO was 140x oversubscribed, so that's about 280 billion dhs to be refunded - but a large proportion of that would have been leveraged finance. If the max of 5x was adhered to by local banks (possibly it was after debacle last time) then you could expect that there's still 60 billion dhs or more looking for a home. That should make the markets perk up a bit.
But why wouldn't Saudi investors take their money back? You mean they may reinvest it locally as opposed to in Saudi? _________________ UAE IPO list | posting guidelines
Note the figures for numbers of shares issued. About 1700 for Emiratis (down from the intended minimum of 3000) and 0.45% of amount for wholesale investors. So that 500,000 you applied for would net you 2250 shares.
I did read in an article within the last couple of weeks that the subscription fee of 1% is only applied to the shares issued, not the number applied for.
Gulf News 31 October 2005:
Dana Gas to seek ADSM listing in mid-December
Staff Report
Dubai: Dana Gas (DANA), which completed a Dh2.06 billion IPO in early October, expects to list on the Abu Dhabi Securities Market (ADSM) by the second week of December after completing incorporation formalities, officials said.
The regional natural gas company said it was holding discussions with the Abu Dhabi Securities Market and with its financial adviser HSBC and had called a shareholders meeting on November 9.
It also plans to list later on other exchanges in the region. "We are hoping to do it before that (November 2) but it is difficult to say now," a company official said.
Dana Gas said in a statement yesterday it had approved the results of the share allocation and the refund within 21 days of the close of the initial public offering on October 3.
"The receiving banks have arranged to send share allotment letters by registered post along with the bankers draft cheques for the refund amount or credited the refund amount into the bank account of the subscriber."
The IPO received 425,382 subscriptions from some 100 nationalities. Each GCC investor in the Dh700 million retail tranche will receive 1,704 shares while each subscriber in the Dh1.27 billion wholesale segment will receive 0.4506 per cent, or 450 shares for every 100,000 shares applied for.
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your comments please.
. I'll add the stuff I posted elsewhere...
)...
. Maybe other banks will have easier ways of getting the 5x leveraging. HSBC will leverage 3x if you invest 100,000 dhs yourself, or 2x if you invest less.
?
?
