Foreigners bought about 70% of a landmark Iraqi share offering

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.( Note to Mods: If you feel I posted this in the wrong section, please feel free to move to ISX forum. I put it here because I felt it was newsworthy. Thanks )

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By ALEX DELMAR-MORGAN in Doha and RORY JONES in Dubai

Foreigners bought about 70% of a landmark Iraqi share offering, in a key test of foreign investor confidence in the country as it recovers from years of war.

Link:

http://online.wsj.com/article/SB10001424127887324900204578282071463217256.html

Demand for the $1.3 billion initial public offering of Asiacell Communications, an Iraqi mobile phone operator, slightly exceeded the number of shares of offer, Shwan Ibrahim Taha, chairman of Baghdad-based Rabee Securities, the brokerage firm that organized the sale, said without elaborating. The remainder went to Iraqi investors.

More details about the IPO are to be released on Monday.

The Asiacell IPO is the largest such offering in the Middle East since 2008, and the high level of foreign interest could signal that investors' quest for yield extends to riskier emerging markets such as this, one of the world's newest so-called frontier markets. However, it could also indicate that Asiacell's controlling shareholder, Qatar Telecom, has used the IPO to purchase new shares, and increase its holding in Asiacell from its current 53.9%.

Qtel said last year it intends to raise its stake in Asiacell to 60%, subject to regulatory approvals The Qatari company declined to comment Sunday on the Asiacell IPO.

Asiacell said minority shareholdders were selling 25% of the company, or 67.5 billion shares, priced at a minimum of 22 Iraqi dinars ($0.02) per share. Trading is to begin Monday on the Iraq Stock Exchange.

The IPO is expected to increase the liquidity of Iraq's tiny stock market, as it nearly doubles the value of companies traded there, ISX Chief Executive Taha Abdulsalam said. Trading on the ISX, which opened in 2004 and now has more than 90 listed companies, is currently dominated by bank stocks. After a broadly flat, but volatile 2012, fund managers expect the market to perform strongly this year as corporate profits increase.

Some analysts had been skeptical that Asiacell would be able to raise the full $1.3 billion in the IPO, amid fears about Iraq's continued political unrest, and its illiquid stock market.

Yet Iraq has been experiencing robust economic growth as a result of rapidly rising oil production. Growth is expected to average 14.6% this year and 11.9% in 2014, higher than any other country in the Middle East and North Africa region, with the exception of Libya, the International Monetary Fund predicts.

"We have had three wars, 13 years of economic sanctions and we still have a lot of problems, but we are expanding by double digits," said Mr. Taha at Rabee Securities, which acted as sole distributor and selling agent for the Asiacell offering.

The country is yet to upgrade to third-generation mobile-phone networks known as 3G, and mobile penetration is estimated at just 80% of the population in Iraq, compared with more than 150% in other oil-rich countries such as the United Arab Emirates and Saudi Arabia. Together, those factor provide an opportunity for Iraq's three mobile operators to significantly expand revenues.

All three carriers were required to list a quarter of their shares on the stock exchange by August 2011 as part of their licence agreements. Asiacell missed the deadline but is the first to do so. Zain Iraq, a subsidiary of Kuwait's Zain Group, and Korek, an affiliate of France Telecom, FTE.FR +0.10%have yet to announce dates for offerings or listings on the ISX.

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The country is yet to upgrade to third-generation mobile-phone networks known as 3G, and mobile penetration is estimated at just 80% of the population in Iraq, compared with more than 150% in other oil-rich countries such as the United Arab Emirates and Saudi Arabia. Together, those factor provide an opportunity for Iraq's three mobile operators to significantly expand revenues.

All three carriers were required to list a quarter of their shares on the stock exchange by August 2011 as part of their licence agreements. Asiacell missed the deadline but is the first to do so. Zain Iraq, a subsidiary of Kuwait's Zain Group, and Korek, an affiliate of France Telecom, FTE.FR +0.10%have yet to announce dates for offerings or listings on the ISX.

keep it coming Rsskelton! these are very exciting times for the little guy. we have taken opportunity to jump into a situation that has great promise and potential for huge profits.

i guess i better get back to accumulating more capital for investing in the next telecomm to come online.