Investors leap on Saudi Telecom

There was a large appetite for shares in Saudi Telecom

Saudi Arabia's biggest privatisation in over 20 years has been eagerly received by hungry investors.

The Initial Public Offering (IPO) of 30% of Saudi Telecom, the country's sole telecoms provider, has been several times oversubscribed according to reports.

Finance Minister Ibrahim al-Assaf said there was no need to make the IPO available to corporations because of the high take up among private investors.

Under the government's plans, 20% of shares have been put on sale for Saudi citizens, while another 10% are for two public pension funds.

Eager buyers

The Saudi government announced plans to privatise part of its telecommunications network in September 2002.

Local banks that received the application details offered favourable loans to citizens and interest-free loans to their employees in order to encourage take-up of the offer.

Mr Assaf said final details of the subscription would be announced on Tuesday but reports suggest the offer was almost twice oversubscribed.

The sale is expected to net the government $4bn after selling shares for 170 riyals ($45) each.

"There is no intention to open the IPO for companies or mutual funds because shares on offer have been oversubscribed," said Mr Assaf.

Last-minute dash

Mr Assaf was responding to reports that the shares had received a poor reception and that the government would extend the three week offer period, which officially ended on Monday.

But reports suggested a slow response in the first two weeks had been offset by a raft of buying by heavyweight investors last week.

Saudi Telecom's assets were valued at $11.4bn in September 2002. But economic studies have predicted this value will swell by another 20% once the company is listed on the local bourse.

The shares are due to list on the Saudi bourse in February and will become the second largest listed company in terms of capitalisation after the market leader Saudi Basic Industries Corp (SABIC).