Oman's OQ Plans to Raise $490 Million Through IPO of Methanol, Ammonia Division

Oman’s OQ has initiated the process of launching an initial public offering (IPO) for its methanol and liquefied petroleum gas (LPG) unit, aiming to raise up to $490 million (OMR 188.2 million) as part of its ongoing efforts to bolster Oman’s energy and industrial sectors, as per several media reports. The IPO will see OQ offering 1.69 billion shares, representing 49% of OQ Base Industries’ (OQBI) total issued share capital, priced between Bzs106 and Bzs111 per share. At the upper end of the pricing range, the company’s valuation would reach OMR 385 million. This move is part of a broader strategy to align with Oman’s Vision 2040, which aims to position the country as a leading force in energy development on a global scale.

Ashraf Hamed Al Mamari, group CEO of OQ, expressed that the IPO is not only a significant achievement for the company but also reflects OQ's broader mission to fuel Oman’s development. This move is seen as a clear step toward making a lasting impact on both the local and global energy and industrial landscapes. The IPO is the latest in a series of strategic divestments by OQ, as the company has already listed four of its subsidiaries on the Muscat Stock Exchange (MSX) in the past two years. This demonstrates OQ’s ongoing commitment to expanding its presence in the market while meeting the goals set by Oman’s national development plans.

In this IPO, a number of anchor investors have already committed substantial sums to subscribe for shares. These include Falcon Investments, Gulf Investment Corporation, Saudi Omani Investment Company, and the Social Protection Fund, who have pledged up to OMR 56 million to secure a stake in OQ Base Industries. The offering will be split into two tranches: one for institutional investors and another for retail investors, with the subscription period set to run from November 24 to December 1. The shares are expected to debut on the Muscat Stock Exchange on December 15, marking a significant moment for both OQ and the Omani stock market.

To attract investors, OQBI has also announced a strong dividend strategy. The company plans to pay around $85 million in dividends for the year 2024, with a commitment to increase payouts by at least 5% annually in 2025 and 2026. This attractive dividend structure is expected to be a key factor in driving investor interest. OQBI, based in Salalah, has a combined production capacity of 1.8 million metric tons per annum (mtpa), with methanol contributing approximately 1.1 mtpa of the total output. For the year 2023, OQBI posted a revenue of $510 million and an impressive adjusted EBITDA margin of 43.1%.

Additionally, OQBI expects to distribute a total dividend of $63.6 million (OMR 24.5 million) for the first nine months of 2024, with a second dividend tranche of approximately OMR 8.2 million scheduled for April 2025. To facilitate this IPO, OQ has engaged Bank Dhofar, Bank Muscat, and Morgan Stanley & Co as joint global coordinators and bookrunners. The OQBI listing is part of a wider trend of private company listings across the Middle East, with other companies, including IT services firm Alpha Data and Bahrain’s AlAbraaj Restaurants Group, also preparing for IPOs later this year.