The Abu Dahabi Group's second telecom venture, Wateen Telecom Limited (WTL) is going public by offering 110 million shares while 90 million shares have been allocated under the green shoe option. WTL shares are being offered at the face value of Rs 10 each despite the fact that fair value of the company has been calculated at Rs 22.30 while the book value at Rs 52 per share.
It was revealed in a presentation to the members of the Lahore Stock Exchange here on Thursday. The WTL Chief Executive Officer Tariq Malik and Arif Habib of Arif Habib Securities also spoke on the occasion. The company is expected to get two billion rupees through the IPO. The sponsors of WTL, Abu Dhabi Group's Chairman, Shaikh Mubarak Al-Nahyan, has strong commitment with Pakistan which is obvious from 2 billion dollar worth investment in Pakistan making it the largest foreign investor in the country.
Abu Dhabi Group besides telecommunications has investment in banking, real estate development and hospitality, media and more recently into in healthcare. Wateen posted a profit of Rs 6 billion while Rs 1.018 billion after tax profit in the fiscal year of 2008-09, which translates into an earning of Rs 4.88 per share. The company has already earned provisional listing at KSE and is being traded with fair volumes.
Arif Habib said that his group has been appointed as the lead arranger and advisor to the IPO. He said that Wateen which the only bulk and retail network provider in Pakistan is still expanding its network. He further said that the intrinsic value of Wateen's share is Rs 52 per share but it is offering the public at Rs 10 per share.
Country's 14 strongest financial institutions have underwritten this issue. These financial institutions are included: Habib Bank, MCB Bank, Faysal Bank, KASB Bank, National Bank of Pakistan, Atlas Bank, Arif Habib Bank, Bank of Khyber, Askari Bank, Allied Bank, Pak Oman Investment.
Purpose of the proposed Initial Public Offering is to repay PKR 1.469 billion to financial institutions as against the Company's financial obligations arises out of payment of LCs, to acquire 49 percent shares (397,027 shares of face value of PKR 100 per share of Wateen Solutions (Pvt) Limited (formerly National Engineers Private Limited) amounting to PKR 490 million to make it a wholly owned subsidiary of Wateen Telecom Limited to broaden the investor base through an increase in the number of shareholders, and provide the public investor an opportunity to participate in the future of the Company with sound prospects.
It was also briefed that JS Research in its report has revealed that currently Wateen has 418m shares in issue, with Warid Telecom International (79.8 percent) and Bank Alfalah (20 percent) being the two key shareholders. This IPO is expected to dilute their stakes by 29-32 percent. While the leading brokerage and investment house, BMA Capital in its Thursday's report declared the fair value of the Wateen's share at Rs 22. Discussing the future prospects of the company, the report revealed that company seems to be in green zone and expecting share value to sustain this level in coming days.