Wednesday, February 27, 2013

Kuwait Flight to Iraq

Travellers stand in line with their luggage at Baghdad International Airport

Baghdad Invest - 27/02/2013 Baghdad.

After a freeze that lasted more than two decades, Iraq's state airline on Wednesday launched its first flight to Kuwait since former Iraqi dictator Saddam Hussein's invaded the neighbouring nation in 1990.

Iraq's foreign and transport ministers travelled on the symbolic Iraqi Airways flight, hailed by officials as a sign of improving relations between the oil-producing neighbours, and they were greeted by Kuwaiti officials upon landing.

The Iraqi transport ministry said there would now be regular flights between the countries.

"Today was the first flight between Iraq and Kuwait after a stoppage that lasted more than 22 years," the ministry's media advisor Karim al-Nuri said.

"This visit shows that Iraq has started to be open, especially with the state of Kuwait ... I believe that relations are heading in a positive direction."

The invasion of Kuwait led to the first Gulf War in which a U.S.-led coalition intervened to force Iraq out.

Diplomatic ties between the Middle East neighbours were bolstered last year after they came to a settlement over Gulf War-era debts, and by a series of bilateral visits involving Kuwait's ruler and Iraq's prime minister. In December, Kuwait's state-run airline dropped legal cases against Iraqi Airways in return for compensation of $500 million.

Although one small private carrier offers direct flights between the two countries, major airlines route through cities such as Dubai even though the nations' capitals lie just 560 km (346 miles) apart. Kuwait's state-run carrier has yet to restart flights to Iraq.

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Tuesday, February 26, 2013

Note to Investors: Iraq

Note to Investors - Iraq has its act together

Iraqi investors at the ISX in Baghdad. Asiacell's successful IPO has almost doubled the exchange's market cap overnight.
Baghdad Invest - 26/02/2013 Baghdad.The investment case for the Iraq Stock Exchange (ISX) has never been stronger. The IMF has reported that the Iraqi economy grew 10.2 per cent last year and expects growth to accelerate to 14.7 per cent this year.

Corporate earnings are growing rapidly as well.
In the banking sector, which accounted for about 80 per cent of the total year-end 2012 market capitalisation, net profit was up 83 per cent year-on-year in the first nine months of last year.
Yet investors from the GCC have generally remained on the sidelines. Reasons for this include the lack of third-party custody, a small market cap - only US$5billion (Dh18.36bn) at the end of last year - low average daily turnover ($5 million for December), and a limited choice of sectors.
Two recent developments, both particularly relevant to GCC investors, have the potential to resolve these issues and unlock significant foreign capital inflows.
The first is the listing of two majority Arabian Gulf-owned Iraqi telecoms companies.
The second is the awarding of Iraq's first custody licence to a Gulf banking group, a breakthrough that few were predicting even a few months ago and few are aware of even now.
The successful share offering of Asiacell, majority owned by Qatar Telecom (Qtel), has almost doubled the exchange's market cap overnight and given equities investors exposure to Iraq's fast-growing and highly profitable telecoms sector for the first time.
Asiacell and its advisers, the Iraqi brokerage Rabee Securities and its affiliate Melak Iraq, have managed to pull off the biggest debut in the Middle East since 2008.
The offering, worth $1.24bn, was fully subscribed and the shares closed up 5.7 per cent on the first day of trading.
Seventy per cent of the shares were taken up by foreign investors.
The largest of these was the current majority shareholder Qtel, followed by high net worth individuals in the GCC and a handful of foreign investment funds.
The IPO is a requirement of the mobile companies' licences, all of which mandate that the companies offer 25 per cent of their shares to the public.
While forcing privately held firms to go public might seem a somewhat counter-intuitive method to develop a country's capital markets, in the case of Asiacell the strategy seems to have paid off.
This listing has also set an important precedent for Iraq's two other mobile phone companies - Zain Iraq and Korek Telecom - that are also required to offer their shares to the public. Zain is expected to list by June. Zain Group's existing GCC investor base and its high profile in the region are likely to increase this IPO's appeal to regional investors.
These listings have the potential to raise the total ISX market cap to more than $15bn, at last moving the exchange off the list of the world's smallest bourses. A clear path to this goal has now been forged.
The start of custody services is a second important step in this direction. Beginning this year, National Bank of Kuwait (NBK) has begun custodying Iraqi shares through its 80 per cent-held subsidiary Credit Bank of Iraq.
Custody has been a much-anticipated development for the Iraqi market because most of the larger institutional investors have mandates requiring their shares be held by custodians.
After hopes were dashed last year when HSBC cancelled its custody plans for Iraq, the provision of custodial services, even if not by the international franchise many were expecting, is an exciting breakthrough.
Credit Bank of Iraq received the licence at the end of last year and NBK's custody service "went live" last month.
So far, its main Iraqi business has been custodying shares from the Asiacell IPO but it is now set up to custody all the existing listed companies as well.
NBK is one of the top-rated banks in the region and Kuwait's largest bank, with $58bn in assets. It will undoubtedly be a satisfactory custodian for GCC investors and for many farther afield as well, particularly were it to enter into sub-custodian arrangements with global custodians.
With attractive mobile-phone companies coming to market, a custody solution finally at hand and a strong outlook for Iraqi GDP growth and corporate earnings, the ISX is now in a position to mobilise significant amounts of capital from GCC investors.
This is a welcome development both for Iraq and for the region.

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Saturday, February 16, 2013

Why it makes sense to invest in Iraq

Baghdad Invest - 16/02/2013 Baghdad.

Hidden behind the constant news flow of suicide bombings, sectarian violence and other atrocities in Iraq, something quite extraordinary occurred recently in the ancient city of Baghdad that may have been ignored by much of the global media.

Earlier this month, the Iraqi Stock Exchange (ISX) floated its biggest ever initial public offering – raising $1.3-billion in shares of Asiacell Communications (TASC:IQ), an Iraqi mobile phone operator.
It was, in fact, the biggest IPO in the Middle East in five years.
Even more remarkable, 70 percent of the share buyers came from overseas (particularly the Persian Gulf states), suggesting higher confidence in a country struggling to recover from decades of war (with the Americans, the Kuwaitis, the Iranians and each other) and the devastating legacies of Saddam Hussein’s brutal regime.
Shwan Ibrahim Taha, chairman of Rabee Securities, the Baghdad brokerage that exclusively organized the Asiacell offering, told the Wall Street Journal that demand slightly exceeded the number of shares available.
Established in 1999, Asiacell has more than 10 million subscribers and is controlled by Qatar Telecom (DSM: QTEL), which owned a 54 percent stake just prior to the IPO. The Journal noted that Qtel had earlier stated its intention to increase its ownership in Asiacell to 60 percent.
Managing director and company founder Faruk M. Rasool is also a key shareholder in Asiacell.
A profitable company, Asiacell is one of three mobile operators in Iraq – the others, Zain Iraq, a subsidiary of the Zain Group, and Korek Telecom, an affiliate of France Telecom S.A. (NYSE: FTE), have yet to go public.
Asiacell’s public offering almost doubled – to about $10 billion -- the market cap of companies in the tiny, largely illiquid ISX, which was introduced in 2004 (one year after the U.S.-led invasion that toppled Saddam) and now lists 84 stocks.
While the oil sector dominates the Iraqi economy (which still attract the bulk of foreign investments), banking and finance securities dominate the exchange.
Self-regulated, but under the supervision of the independent Iraq Securities Commission, the ISX also comprises companies engaged in insurance, retail, construction, beverage and retail.
But where Iraq is concerned, it’s still all about oil.
Indeed, it is the ramp-up of oil production that has propelled Iraq’s economy – GDP is expected to surge by 9 percent in 2013, according to acting central bank governor Abdul-Basit Turki al-Sae'ed, following a 10 percent spurt last year.
Moreover, the Iraqi central bank’s foreign reserves are expected to reach $110 billion by the end of the year, while Iraq’s oil production surpassed 3 million barrels-per-day for the first time in 30 years (at 3.4 million, it's up 40 percent in just three years).
"We have had three wars, 13 years of economic sanctions and we still have a lot of problems, but we are expanding [our economy] by double digits," said Taha.
Hence, as oil largely supports the Iraqi economy, underneath a diverse array of other sectors are poised for growth.
Richard Greer, a partner of Laurel Capital Kingsway LLP in London, recently penned a column in the Financial Times in which he extolled some of Iraq’s economic virtues.
“[There are now] the beginnings of some sense of civil order, the accumulation and investment of corporate cash, and a widening economic growth,” he wrote.
“Most of the wealth created may yet disappear overseas, but given Iraq’s mercantile tradition, there will be plenty available to fund corporate growth through the local stock exchange.”
Indeed, sectarian violence, still a plague in Iraq, has plunged by some 90 percent since the peak years of killings in 2006-2007.
“In the cities, 24-hour street life has returned, and there is a free and relatively safe movement of people and goods around the country,” Greer noted.
Inflation in Iraq is moderate at 5 percent -- extremely low for an unstable emerging or frontier market.
In addition, the International Energy Agency estimates that Iraq will account for 45 percent of the globe’s marginal oil production over the next two decades, replacing Russia as the world’s second-biggest oil exporter.
As a result of rising oil income, Greer points out, consumer spending has returned, citing that in 2011 General Motors (NYSE: GM) sold 32,000 cars in Iraq, making it the automaker’s second-largest market in the region.
Still, with dozens of people killed in terror attacks every month, compounded by the endless intrigues surrounding Prime Minister Nouri al-Maliki and his Sunni and Kurdish enemies, foreign investors are likely to be turned off by Iraq as an investment target.
Even Taha admitted to Western media that Iraq is “a very difficult place to do business in. No foreign investors come to Iraq thinking they are investing in Switzerland, and for Iraqis themselves, these bombings are becoming daily occurrences.”
Taha al-Rubaye, the chief executive officer of the stock exchange, said he hopes the successful Asiacell IPO leads the government to enact more policies to encourage further foreign investment and diversify the Iraqi market away from an ove-dependence on oil.
“It’s not easy to change . . . the mentality [of people in power],” al-Rubaye told Associated Press. “There are delays. They are not in a hurry. But I believe it’s also time because the relationship between Iraqis and the world is growing up.”
So, will Asiacell mark a turning point for Iraqi markets?
“The success of the Asiacell IPO will encourage other companies to go public on the ISX,” Hasan Abdul-Karim, chairman of Aljazera Brokerage Co., told The Economist.
Sanjay Motwani, president and portfolio manager for Sansar Capital, who manages one of the largest equity funds in Iraq, the Frontier Fund, believes Iraqi stocks are poised for extraordinary growth.
Motwani commented that sometimes the best investment opportunities present themselves unexpectedly during periods of fear, stress and uncertainty.
“The fundamentals on the ground [in Iraq] -- strong growth, strong credit growth, booming earnings, low foreign ownership -- makes one salivate at the opportunity,” he said.
Indeed, many stocks on the ISX currently trade at a P/E of about 4 (versus almost 15 for the S&P 500 index as a whole).
Noting that Chicago has a higher homicide rate than Iraq, Motwani said that if Iraq were not on the news every day for bomb blasts, Iraqi stocks would command a much higher multiple given the underlying immense growth opportunities.
“We can thank the media for keeping the [price] multiple down,” he added.
Investment opportunities like Iraq will not stay undiscovered forever, Motwani warned.
“Violence has been on a decreasing trend and we expect that to continue,” he stated.
“From our visits to Baghdad and other cities, it seems the locals are tired of fighting and just want to get on with life. Hence, when there are sectarian conflicts, they do not necessarily flare up and spread.”
Motwani believes Americans and other Westerners have a distorted view of the situation in Iraq.
“We think this partially stems from the Western media, which focuses more coverage on the negative aspects, like bombings, rather than the positive -- like the rebuilding of the country,” he said.
“There have also been few stories in the American media on the emerging economy in Iraq and what this means to the area in the near future.”
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Monday, February 11, 2013

Iraq Renewable Energy

Baghdad Invest - 11/02/2013

A project that will use solar and wind power to generate electricity in 15 rural areas kicked off on Monday (January 28th), the Iraqi Ministry of Electricity said.

Iraqi companies have started to build integrated complexes for solar cells and wind-powered electricity towers, ministry spokesman Musaab al-Mudarres told Mawtani.
The 39 billion dinar project ($33.5 million) is expected to take two years to complete, he said, and the ministry anticipates it will generate 55 megawatts of electricity a day in its first phase.
The goal is to produce 400 megawatts of electricity a day within four years, which will provide local businesses and residents with considerable services, he said.
"The areas chosen to implement the project are not served by the national electricity network because they were recently established, and also because they are far from city centres," he said.
The project is "a new experiment in Iraq", deputy electricity minister for energy distribution affairs Amer al-Douri told Mawtani.
"It comes as part of ministry efforts to diversify energy sources, and to lower carbon emissions, which affect the environment," he said.
With the help of an industry-leading Canadian company, sites were chosen in eight provinces in areas where sun and wind are expected to be available throughout the year, al-Douri said.
Of the 15 facilities – located in Baghdad, Anbar, Najaf, al-Muthanna, Dhi Qar, Basra, Maysan and Wasit – 10 will have systems powered by joint solar and wind energy generating systems, while five will be dedicated to solar energy alone.
Last week, the government sent 300 engineers and energy technicians to Canada to receive training in the administration of clean-energy facilities, said Saleh al-Mutlaq, deputy prime minister for service affairs.
Equipment and accessories for the facilities, including solar cells, energy tanks, transformers and windmills are expected to arrive in Iraq by mid-2013, and will be installed by three companies – one Canadian, one German and one Swedish, he said.
"The project will provide a continuous supply of energy to the border areas between Iraq and two neighbouring countries, and the energy will be used to install night-time lighting that will help in improving security in those areas," al-Mutlaq said.
The initiative also will generate 3,000 jobs, particularly suitable for young people with higher education, said Ali Abdullah of the ministry's projects department.
"Work on this project was supposed to start in 2006, but the deterioration in the security situation and attacks by al-Qaeda and other terrorist groups on electricity facilities prevented its execution, until security forces were able to regain control of various cities in the country," he said.
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Tuesday, February 5, 2013

Asiacell Biggest IPO since 2008

THE BIGGEST IPO SINCE 2008 in the entire Middle East AWARD GOES TO....................IRAQ!!!!!!!!!!!!!!!!!!!!! Yipeeeeee!!! WOOOOOHOOOO!! WOW!!

We are so proud and happy - This is an excellent start to 2013.

Iraq is on form!! This is going to be an amazing year.
Baghdad Invest - 04/02/2013
Asiacell jumped as much as 10 percent on the first day of trading after Qatar Telecom QSC’s Iraqi unit completed the biggest Middle East initial share sale since 2008.
The shares rose to 24.2 dinars before paring gains to 23.25 dinars at the close on the Iraq Stock Exchange in Baghdad. A total of 32.9 million shares were traded, according to data from the bourse.
Asiacell raised 1.49 trillion dinars ($1.3 billion), the most for an IPO in Iraq and the largest in the Middle East and North Africa since Saudi Arabian Mining’s share sale more than four years ago, according to data compiled by Bloomberg. Qatar Telecom raised its stake in Asiacell to 64.06 percent from 60 percent, the company said in a statement today.
“We believe that the Iraqi market is about to enter a period of rapid broadband and data growth,” Qatar Telecom’s Chairman Sheikh Abdullah bin Mohammed Al Thani said in the statement. Asiacell plans 3G and 4G services in Iraq, Managing Director Faruk Rasool told Dubai-based Al Arabiya TV today.
The share sale helped double the market value of the bourse from $4.66 billion last year, Taha Ahmed Abdul-Salam al-Rubaye, the bourse chief executive officer, said last month. Iraq’s two other main mobile-phone operators, Zain Iraq, a unit of Kuwait’s Mobile Telecommunications Co., and Korek Telecom, part-owned by Frence Telecom SA -- must also sell 25 percent of their shares on the bourse to comply with their licenses.

Foreign Investors

“There is demand for Asiacell shares, and the quantity that was sold is considered good, knowing that this is the first session,” Muhammad Mahdi Salih, a broker for al-Abrar brokerage company, said in an interview in Baghdad.
Foreign investors bought 70 percent of the offering and Iraqis the remainder, Rabee Securities, the sole organizer of the IPO, said in a statement yesterday. The IPO, which closed Feb. 2, was fully subscribed, as the company sold all 67.5 billion shares at a minimum of 22 dinars each.
Sulaymaniyah-based Asiacell obtained a 15-year mobile telecommunications license in 2007 and had 43 percent market share by revenue at the end of September, with 9.9 million individual and corporate subscribers.
The value of Asiacell shares, the only telecommunications company on the Baghdad bourse, is 49.9 percent of the exchange’s total market capitalization, according to Rabee Securities.

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Sunday, February 3, 2013

Asiacell Iraq IPO Sold Out

Asiacell Encourages Iraq Bourse Growth After $1.3 Billion IPO

Baghdad Invest - 03/02/2013
Asiacell Communications PJSC’s share listing in Baghdad today, after the largest IPO in the Middle East since 2008, will help lure liquidity and foreign investment to the bourse, the Iraq Stock Exchange chief said.
“The success of the Asiacell shares selling today proved that there is Iraqi and non-Iraqi liquid money willing to be invested in the Iraq Stock Exchange and in Asiacell shares,”Taha Ahmed Abdul-Salam al-Rubaye told reporters in Baghdad today. Trading on the telecommunications company’s shares starts tomorrow, he said.
The initial public offering was fully subscribed, as Asiacell sold all 67.5 billion shares, or 25 percent of its share capital, at a minimum of 22 dinars each in the IPO that closed Feb. 2, he said.
Asiacell, majority-owned by Qatar Telecom QSC, (QTEL) raised 1.49 trillion dinars ($1.3 billion), the most for an IPO in the Middle East and North Africa since Saudi Arabian Mining Co.’s (MAADEN) share sale more than four years ago, according to data compiled by Bloomberg. Asiacell’s public offering will help double the market value of the Iraq Stock Exchange from $4.66 billion last year, al-Rubaye said last month.
“This is an invitation to all the other telecom companies to turn into shareholding companies,” as required by their contract terms before listing on the bourse, al-Rubaye said today.
Like Asiacell, Iraq’s two other main mobile-phone operators-- Zain Iraq (ZAIN), a unit of Kuwait’s Mobile Telecommunications Co., and Korek Telecom, part-owned by France Telecom SA (FTE) -- must sell 25 percent of their shares on the stock exchange to comply with their licenses.
Sulaymaniyah-based Asiacell obtained a 15-year mobile telecommunications license in 2007 and had 43 percent market share by revenue at the end of September, with 9.9 million individual and corporate subscribers. 

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