Some Omani national companies offer part of their shares for public subscription whether by obtaining temporary profits when they sell them on the Muscat Stock Exchange or keeping them as long-term savings and obtaining the usual annual dividends.
The decision of the "OQ Exploration and Production" (OQEP) to offer 25% of the shares for public subscription gives citizens and foreigners the opportunity to own OQEP shares. In such a process, foreign investors have always succeeded in owning large quantities of these shares, but they resell them upon listing, and benefit from the profits they achieved in a few days without keeping their investments in the country for a long period.
The question that is raised every time in such cases is: "Why is the offering of shares in government companies not limited at the beginning to individual citizens and national institutions only, so that they can sell them to non-Omanis on the Muscat market later?"
The answer comes from the concerned authorities that the government is working to attract foreign investments to the country by allowing non-Omani institutions and individuals to buy shares of these companies, which leads to activating commercial, financial, banking and purchasing transactions, and the movement of funds from outside the country. This help in activating the operations of the Muscat Stock Exchange.
The next question that is raised again to these authorities is: "Are citizens, institutions and well-known Omani companies unable to fill the value of the offered shares?" The answer comes from the same authorities that this process helps in introducing Oman and works to activate institutions, brokerage companies and banks in dealing with such cases to a greater extent, which gives a reputation to the country and the banking and financial institutions working in these cases.
The reality is that foreign investment in such valuable companies does not remain for a long time at the same rates as the purchase, because their owners sell the shares of these companies and exit with their money at multiples of what they brought from abroad, while the returns for Omani individuals and institutions remain at small rates in the end.
If we review, for example, the current value of foreign investment in OQ Group, according to the Financial Services Authority data, we will see that Omani investment currently amounts to about 80.49% of the total value, while the share of non-Omanis in the company amounts to 19.51%, of which the percentage of 12.44% are for Gulf citizens, 0.16% for Arabs, and 6.91% for foreigners. This gives the idea that non-Omani institutions and individuals do not hold shares in Omani companies to a large extent, and their only concern is to benefit from initial subscriptions and sell them to citizens at higher prices later.
The new subscription for OQ Exploration and Production Company will be listed soon, where 60% of the total shares offered will be allocated to institutional investors, and the remaining 40% will be allocated to small individual investors, according to the mechanisms that will be adopted by the Financial Services Authority.
There are countries and institutions that offer their shares in initial subscriptions only to citizens, institutions and local companies at first so that they can benefit from them, and then license them to others. Can we do the same and give citizens the opportunity to benefit from these good subscriptions at first?
HAIDER AL LAWATI
The author is a Muscat-based economic analyst who previously worked for CBO and OCCI
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