Iraqi telco Asiacell shares surge on bourse debut

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Shares in Iraqi mobile telephone operator Asiacell jumped the maximum 10 percent in their Baghdad bourse debut on Monday after investors in the company raised US$1.24bn in Iraq's largest-ever share offer.

The shares were at IQD24.2 at 0707 GMT on the Iraq Stock Exchange (ISX). A total of 780,000 shares had changed hands as of that time; the stock is allowed to trade within a 10 percent range up or down, according to bourse rules.

In a public offer that closed on Sunday, investors in Asiacell - majority-owned by Qatar Telecom (Qtel) - sold 67.5bn shares at 22.0 Iraqi dinars each, offloading a quarter of the company's share capital.

It was the first big share offer in Iraq since the US-led invasion of 2003 and largest equity offer in the Middle East since 2008.

"The stock is unlikely to be very liquid considering that a large part of the share sale was bought by foreign direct investors who are likely to keep the shares for a long time," said Hassan Aldahan, chairman of Baghdad-based investment company Bain Alnahrain.

Foreign investors bought about 70 percent of the shares sold in the offer and Qtel was expected to be a major buyer, Layth Sulaiman, head of the exchange's board of governors, said last week.

The Qatari company agreed in June to pay US$1.5bn to raise its stake in Asiacell to 60 percent from 30 percent.

Ahead of the public share offer, Qtel's stake stood at 53.9 percent, with the remaining 6.1 percent awaiting regulatory approval, so it was expected to use the flotation to acquire the rest of what it was due. Qtel has so far not commented on the results of the Asiacell offer.

The offer was seen as a test of investor confidence in Iraq as the country recovers from years of war, political instability and financial sanctions.

Asiacell's listing values the telecommunications operator at US$5.4bn, and its listing more than doubles the Iraqi bourse's market capitalisation.

"This marks the birth of the ISX as a real stock market," said Bartle Bull, portfolio manager of Northern Gulf Partners' Iraq equity fund in New York.

"Iraq has a far more open, dynamic business culture than many Gulf countries. The Iraqis are smarter and tougher. We should see some more companies coming."

Among future listings are likely to be Asiacell's domestic rivals Zain Iraq, a subsidiary of Kuwait's Zain, and France Telecom affiliate Korek. Like Asiacell, they are required to offer a quarter of their shares under the terms of their operating licences, having missed an initial August 2011 deadline to do so.

"The big cell phone companies are the bellwether stocks in any market, they're so well correlated to the overall GDP story - that's why international investors get into these markets," said Bull, who invested about 10-20 percent of his fund's money in the Asiacell offering.

He said he expected Zain's share offer to be launched by mid-year.

"Zain of Kuwait is one of the great, well-known emerging market stocks because they are in a bunch of otherMiddle East and Africa markets - fund managers trade this stock," Bull added.

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