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Middle East investors queue up for Dana Gas

Dana Gas, the Middle East’s first private-sector natural gas firm, said its stock sale was oversubscribed 140 times.

Dana Gas, the Middle East’s first private-sector natural gas firm, said its sale of shares in an initial public offering (IPO) that closed last month was oversubscribed 140 times. A record 413,000 subscribers bid AED288 billion (US $78.4 billion) during the offering, which sought to raise AED2.06 billion for a 34.33% stake in the Sharjah-based gas company.

The remaining 65.67% equity in the six billion AED venture has come from the 300 founding shareholders, including the Sharjah government and Crescent Petroleum, a Sharjah-based energy firm whose gas facilities and resources form the core of Dana Gas’ business proposition. “The Founders’ Committee would like to thank all those who applied for Dana Gas shares, especially those who travelled long distances and stood in long lines waiting patiently to submit their applications.

“We are particularly pleased with the strong response and the fact that all GCC nationals were well-represented in the IPO, which in turn demonstrates the truly regional appeal of the company,” said a Founders’ Committee statement released after the offering closed early last month.

Applications were largely from Saudi investors, according to the UAE banks where the shares were sold. Industry insiders believe that the IPO highlights the strong regional appetite for private company investments in Middle East oil and gas sectors, where most firms are state-owned.

“The capital markets here are seeing a new beginning, and this particular IPO is open to foreign investors. That was not the case earlier. So, you see a wide investor base, which is very positive for the market,” said Lama Abou Ghali, senior capital markets analyst for ABQ Zawya, a financial information provider. “It shows investors are interested in the region and are investing for the long term. Moreover, what’s driving investors are the good returns expected from Dana Gas,” he said. AED1.27 billion wholesale tranche (one of a set of classes or risk maturities that comprise a multiple-class security) was 222 times oversubscribed by individual, corporate, and institutional investors from a record 101 different nationalities.

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