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Watania IPO 7 times oversubscribed

Haseeb Haider / 3 May 2011

ABU DHABI — Abu Dhabi’s newest insurance company, the National Takaful Company, or Watania, made a splash in the equity markets with its public issue seven times oversubscribed.

The IPO, which was opened on April 18 and concluded on May 1, received an overwhelming response as applications for 590 million shares were received for the 82.5 million shares offered to                  the public.

Watania is the second company which has tapped the equity markets this year. Earlier, Insurance House raised capital from the market, while Eshraq Properties May launched its offer on May 1.

Approximately twenty million allocated shares, or 13.33 per cent of the total share capital, for UAE individual retail investors and 62 million shares were made available to UAE, GCC, and other retail and institutional investors.

The company is backed by Abu Dhabi National Islamic Finance, Abu Dhabi National Insurance Company, Abu Dhabi National Energy Company and Aldar Properties, who have subscribed to an aggregate value of Dh67.5 million shares, representing 45 per cent of the total share capital of Dh150 million.

The IPO comprised the remaining 55 per cent of the shares, valued at Dh82.5 million. UAE national retail investors were allowed to subscribe up to 5,000 shares with a guaranteed allotment of 2,000 shares per application, whereas other UAE, GCC, and other retail and institutional investors could apply for a minimum of 10,000 shares, with additional subscriptions in multiples of 1,000 shares.

The allotment will be made on a pro-rata basis for this tranche and the refund date has been set for May 15.

The shares will be listed on the Abu Dhabi Securities Exchange.

“The strong public response represents a positive expression of public confidence in the future of Shariah-compliant insurance in the UAE and in the strength,” said Aref Ismail Al Khouri, Chairman of the Watania founders’ committee.

“We believe Watania will play a major role in developing the Takaful industry in the UAE through the introduction of reliable Shariah-compliant insurance solutions and through capacity building in this vital emerging sector.”

Islamic insurance, or Takaful, penetration as compared to conventional insurance is lower in most GCC countries. Recent statistics reveal that Takaful gross contributions grew at compound annual growth rate, or CAGR, of 83 per cent between 2004-2009, whereas conventional premiums grew at a CAGR of 25 per cent during the same period. Takaful gross contributions in the UAE are projected to grow at a CAGR of 30 per cent between 2010 and 2014, outpacing growth in the overall insurance sector CAGR of 17 per cent during the same period.

“We are confident of Watania’s management capability to successfully implement its business plan,” said Ahmed Wahdan, the head of equity capital markets at NBAD’s Investment Banking Group. NBAD was the financial advisor and lead receiving bank for this IPO.

·         haseeb@khaleejtimes.com

 
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