Al Izz Islamic Bank may float IPO by next month [Times of Oman]

Muscat: The initial public offering (IPO) of Al Izz Islamic Bank, the second Sharia-compliant financial institution, is seen by next month, if the bank gets approval from regulators on time and everything goes ahead as per the plan.

Sources said the bank and issue managers are taking all out efforts to open the share offer for subscription, after Eid holidays, probably in September. However, the bank is yet to get a final approval from the market watchdog, it was reliably learnt.

The bank has received an 'in principal' approval from the regulatory authority.

However, sources said getting CMA approval is not a major issue, as it can be done within a day or so, and the issue can be opened after a week. However, the subscription period has to remain for 30 days.

The par value of the issue is 102 basias, which include two baisas as issue expenses and it will be open for subscription for one month. The Al Izz Islamic Bank is jointly promoted by Huriah Company, Aabar Investments and Tasameem Real Estate Company for the purpose of offering comprehensive business and retail Islamic banking solutions.

Aabar Investments, one of the strategic investment vehicles of Abu Dhabi, has announced plans to invest heavily in Oman's Al Izz Islamic Bank.

Market size Al Izz Islamic Bank aims to be a leading participant in the emerging Islamic banking industry, offering comprehensive Islamic banking products and services.

In fact, the Sharia-compliant financial institutions may capture 10 per cent of the market share of the total banking assets within few years, according to Islamic banking experts. Oman's banking assets are in the region of $40-42 billion and are growing at a healthy pace. Once Islamic banking products are properly rolled out, the country can expect up to 10 per cent of the market going to Islamic in the first few years.

In four to five years, if Islamic banking in Oman is able to capture 8 per cent to 10 per cent market share, a total Islamic banking asset size of about $6 billion is a possibility.

Unlike traditional banking, Islamic banks provide the entrepreneur with funds for his business venture and get a return based on a pre-determined profit sharing ratio. It appears that a lot of people, who do not come under the formal banking system, will approach Sharia-complaint institutions for their day-to-day banking needs.

Another major advantage the country can expect now is the flow of foreign direct investment (FDI) as there are a lot of Sharia-sensitive investors in the Gulf Cooperation Council (GCC) region. Islamic financial institutions in the region may support Oman's initiatives to develop large scale utility projects like power and desalination plants. (Follow timesofoman.com on Facebook and on Twitter for updates that you can share with your friends.)