This was the share offer that required a football stadium to handle the thousands of applicants, many who journeyed from neighboring Saudi Arabia to participate in the IPO. Shares in Al Rayan Bank opened on the DSM at QR18, which The Peninsula newspaper quoted investors as saying was ‘shockingly low’.
‘We were expecting the opening price to be at least between QR50 and QR60,’ Saudi national Ali Jaman Al Marri, told the newspaper ‘Was all that effort of coming here so many times and spending on travel and stay worth it.’
At a press conference the chairman of Al Rayan Bank’s board, Dr. Hussain Al Abdullah took a more upbeat approach pointing out that this was a good opening price for long-term investors, with the share price representing a good entry level rather than an exit point.
Programmed share sales were apparently behind the early depression in the Al Rayan Bank share price. However the offer price was still more than three times higher than the QR5 paid by IPO investors.
However, for investors who borrowed money to buy a large number of shares only to find their allocation a good deal smaller due to a six times oversubscription, the profits from an immediate sale will be very low.
Doubtless this will not deter some from future IPOs but as the returns diminish so will the number of applicants. Others would argue that getting an IPO away in an environment of collapsing Arab bourses, especially one as big as the Al Rayan Bank, is a credit to the DSM.
Tuesday, June 20- 2006 @ 11:58 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.