Muscat – OQ Base Industries (OQBI), Oman’s sole integrated producer of methanol, ammonia, and LPG products, has announced plans for an initial public offering (IPO) of up to 49% of its shares. This move adds to a series of recent IPOs from subsidiaries of OQ Group.

The subscription period for the IPO is expected to begin this month, pending approvals from the Financial Services Authority (FSA). OQBI is expected to list on the Muscat Stock Exchange (MSX) in December 2024, according to a press statement issued on Monday.

Bank Dhofar, Bank Muscat, and Morgan Stanley have been appointed as joint global coordinators. Both Bank Dhofar and Bank Muscat will also serve as issue managers, with Kamco Investment Company and BSF Capital acting as joint bookrunners.

OQBI’s IPO follows the successful public offerings of three other OQ subsidiaries: Abraj Energy Services, OQ Gas Networks, and OQ Exploration and Production. This new IPO provides investors with exposure to Oman’s only integrated producer of methanol, ammonia, and LPG products, which include propane, butane, condensate, and cooking gas. For the year ended December 31, 2023, the company reported revenue of $510mn, with an adjusted EBITDA margin of 43.1%.

OQ Group owns 100% of the capital of OQBI directly and through its subsidiaries, Takamul Investment Company and OQ Salalah Industries Company.

Commenting on the proposed IPO, Ashraf Hamed al Mamari, Group CEO of OQ,said,“We are pleased to announce the upcoming public offering for OQ Base Industries, one of our key subsidiaries. This follows the success of three previous offerings, which drew high interest from investors. The strong demand has been fuelled by our solid financial performance, operational strength, and attractive dividend policy. This strategic step reflects our commitment to growth and ongoing investment in the energy sector.”

Khalid Khalfan al Asmi, CEO of OQ Base Industries, said,”We are pleased to announce OQ Base Industries’ intention to go public. This milestone is a testament to our employee’s dedication and the trust we have earned from clients and partners. Oman’s strategic location has been a key strength, supporting our competitive business model and increasing the global appeal of our products.”

Dividend Policy

OQBI intends to distribute dividends twice a year following the offering. The company aims to maintain a robust dividend policy designed to return a substantial portion of its distributable free cash flow to shareholders after providing for growth opportunities, subject to credit rating considerations.

For fiscal year 2024, OQBI anticipates a dividend payment of RO32.7mn. The first distribution of approximately RO24.5mn is expected by January 2025 for the first nine months of 2024, with a second distribution of about RO8.2mn anticipated by April 2025. Subsequently, for the fiscal years ending December 31, 2025, and December 31, 2026, the company plans to increase dividends by a minimum of 5% year-over-year.

OQBI is the only integrated producer in Oman of methanol, ammonia and LPG Products, which comprise propane, butane, condensate and LPG sold domestically in the form of cooking gas.

The company is active throughout the natural gas value chain, operating three advanced plants with a combined nameplate production capacity of 1,816 ktpa. OQBI operates through three strategic divisions, methanol, ammonia and LPG products. Its plants are located in the Salalah Free Zone in the south of Oman, near the Port of Salalah. OQBI’s plants process rich and lean natural gas feedstock that is supplied under long-term agreements with Integrated Gas Company through a natural gas transmission network operated by OQ Gas Networks, a subsidiary of OQ.

With the exception of a small portion of LPG sold domestically in the form of cooking gas, all of OQBI’s products are sold pursuant to long-term, arm’s-length exclusive take-or-pay offtake agreements with OQ Trading for export to end markets, principally in Asia and the MENA region and, to a lesser extent, Europe and Africa.