Published: April 9, 2009
Bemo Saudi Fransi Finance (BSFF) has been appointed as lead manager in Al Baraka Bank-Syria’s upcoming initial public offering (IPO) on the recently opened Damascus Securities Exchange.
BSFF will manage the public offering of 35% of the new bank’s S£5bn (US$105mn) capital. The offering is targeted to raise S£1.75bn (US$37mn) through the issuance of 3.5mn shares at the nominal value of S£500 per share. The offering is limited only to Syrian investors to keep within Syrian legal requirements that no more than 49% of any company can be foreign owned.
Omar Al Ghraoui, COO of BSFF, explains to emeafinance: “With most of the foreign ownership percentages being fully subscribed by the founding partners, there is no room for foreign investors. But there is talk that this could be amended so that foreign owners could own more than 49%. But until then new banks currently being established will have to follow this limitation.”
Led by Bahrain-based Al Baraka Banking Group, the founders of Al Baraka Bank-Syria include prominent Syrian and non-Syrian individual and institutional investors, who have collectively contributed 65% of the company’s capital or S£3.25bn (US$69mn). Al Baraka Bank-Syria was licensed by the Syrian council of ministers on June 28, 2007 as the third Islamic bank in Syria.
As lead IPO manager, BSFF will act as the main liaison between Al Baraka Bank-Syria, the Syrian Commission on Financial Markets and Securities (SCFMS) and the participating subscription banks. The IPO will be initiated in the coming months, once approval is granted by the SCFMS.
The mandate comes two weeks after the official launch of the Damascus Securities Exchange (DSE) on March 10, 2009. BSFF was the first brokerage company to execute a buy order marking the beginning of trading operations at the DSE.
Ghraoui says: “The timing is obviously not very good. For informed and uninformed Syrian investors who switch on their televisions see that some of the world’s biggest banks have gone bankrupt or are suffering. That is not very encouraging for investors to invest in the much smaller local banks.”
The Syrian economy has weathered the global financial crisis better than most countries in the region. Ghraoui says that the government has been in talks about a stock market for close to three years. In the end it was a political decision to open it now.
“For the Syrian economy, the cost of potentially postponing the opening of the market until things globally start picking up again outweighs the potential benefit of opening now,” adds Ghraoui.
BSFF is a leading financial services and investment company providing financial advisory, brokerage, asset management and IPO management services to both individual and institutional investors in Syria. emeafinance’s Middle East Banking Awards 2008 recognised BSFF by awarding it the best local investment bank in Syria.