Complex Made Simple

Bahrain port IPO with Nov 24 deadline is at $1.75 a share

Bahrain is raising much-needed cash using a modern way of doing business.

Bahrain, the smallest economy in the GCC, is IPO-ing 20% of its airport operations and hope to raise $32 million, to begin with, through a sale of 18 million shares of APM Terminals Bahrain at BHD 0.66 per share, or $1.75.

IPOs will also encourage competition and transparency which some might label under the reform category.

Why is Bahrain doing this?

Read: Bahrain is splurging on crypto, garnering global attention

Money through reforms

Bahrain, in October, received $10 billion in aid from Kuwait, Saudi Arabia and the UAE to help the country financially during a credit crisis and allow it to proceed with needed reforms, starting with the country announcing VAT introduction in early 2019.

In a 33-page financial program dedicated to eliminating its budget deficit by 2022, the country plans on reducing public spending, introducing a voluntary retirement scheme for government employees and implementing 5% VAT next year.

Update: Bahrain approves VAT after $10.2 bn financial aid

Having planned to improve government revenues, Bahrain announced it would IPO 20% stakes in three logistics-related companies over the next two years, according to the country’s transportation and telecommunications minister Kamal din Ahmed.

Ahmed told CNBC Arabia that Bahrain Airport Services, the operator of Bahrain International Airport, Bahrain Duty-Free and the $1.1 billion new airport terminal are in line to be partially sold on the Bahrain Bourse.

APM Terminals

APM Terminals Bahrain announced on November 18 the first IPO for a transport and logistics company in the Kingdom to list on the Bahrain Bourse, According to The Maritime Standard

APM Terminals currently holds 80% of the shares and the remaining 20% are held by YBA Kanoo Holdings of Bahrain.

The offering will remain available until November 24th and APM Terminals Bahrain shares will start trading on the Bahrain Bourse on 9th December.

Read: S&P banking industry country risk assessment: Bahrain is high risk

APM Terminals Bahrain has an exclusive 25-year concession from the Bahrain Government to manage and operate Khalifa Bin Salman Port (KBSP), according to Maritime Standard.

“The concession, which commenced on 1st April 2009, is renewable with the mutual consent of the company and the Bahrain Government, and gives APM Terminals Bahrain exclusive rights to manage all of Bahrain’s container traffic and the majority of its general cargo traffic,” said Maritime Standard.

The port currently has a container throughput capacity of 1 million TEUs per annum and achieved a utilization rate of around 40% in 2017. There is potential to further expand capacity to 2.5 million TEUs a year in the future, the company states.

APMT Bahrain is focussed mainly on export and import traffic flows, although it aims to develop container transshipment services for the Upper Gulf region through KBSP.

The IPO is structure so as 70% of the shares on offer are allocated to institutional investors (Those applying for over 100,000 shares) while 30% of the shares will be allocated to retail investors (i.e., those applying for up to 100,000 shares)