DOHA: Some 15,000 Qataris — including widows, orphans and the elderly people — who get state dole and 2,000 Qatari people with special needs are eligible to be allotted 750 shares free as part of a state-sponsored initial public offering (IPO) being launched soon.
Mesaieed Petrochemical Holding Company (MPHC) is all set to float the low-priced initial public offering (IPO) that will be open for subscription from December 31 until January 21, 2014. According to lawyer and financial expert, Abdullah Taher, considering that the Qatari population is 300,000 and each one of them applies for subscription to the IPO (priced at QR10.20), each would get 1,077 shares on offer via the IPO. And if only 250,000 Qataris apply for subscription, the number of shares will be slightly up to 1,292 shares, Taher said.
Only Qatari individuals are entitled to apply for subscription as Qatari companies and institutions have this time been barred from benefiting from the state largesse.
The last such IPO was launched by the state 10 years ago, in 2003, when Industries Qatar, holding company for state-owned cement, steel and petrochemical companies, offered low-priced shares to Qatari individuals and entities via a mega IPO.
The MPHC IPO, according to stock and financial analyst, Bashir Al Kahlout, is different because it aims at promoting a savings culture in a largely consumerist society. “Qataris are quite accustomed to selling shares they are allotted via state-sponsored IPOs immediately after listing due to a wider price difference,” an analyst said asking not to be named.
This time, however, the state has taken two major steps to make sure people retain the shares over the long-term (five to 10 years) for capital gains and regular dividend income.
“One of them is that half of the shares allotted as part of the IPO to a minor will be frozen and will not be listed on the bourse for trading so no one can sell until the owner attains the age of 18,” said the analyst.
Talking of the second step, the analyst said: “If an owner retains half the allotted the shares for five years, he gets bonus at the rate of five shares for every 10 held.”
And if the shares (half of the originally allotted ones) are retained over another five years after that, the owner gets another five shares for every 10 held. At the end of 10 years, then, an owner gets a bonus share for every share held.
Owners will be eligible to get the bonus shares over the next five and 10 years if they retain at least 50 percent of the shares allotted to them as part of the IPO. Taher said that his advice to fellow Qataris is that if some of them do not have enough cash to apply for subscription, they should take a bank loan.