DUBAI Dec 20 HSBC Holdings has ceased
to be a bookrunner on Asiacell's planned share sale, raising new
questions about the Iraqi telecom operator's ability float 25
percent of the company to mainly local investors.
The London-listed bank's exit follows that of Morgan Stanley
Inc in September, and a statement from Asiacell on
Thursday showed Baghdad-based broker Rabee Securities as "sole
distributor and selling agent" for its initial public offering
(IPO) of shares.
Asiacell, a unit of Qatar Telecommunications
(Qtel), declined to comment further, and HSBC also declined to
Asiacell and its two rivals in the market, Zain Iraq
and Korek, have to raise funds through IPOs as a
condition of their $1.25 billion operating licenses.
All three companies missed an earlier deadline of August
2011. Asiacell is to be first to float on the Iraqi bourse.
"The absence of global and regional banks providing custody
and brokerage services/access products make it difficult to
pitch the IPO to international investors, so it will be mainly
targeted at local investors," said Marc Hammoud, Deutsche Bank
Such a reliance on domestic demand could mean Asiacell fails
to offload the full 25 percent of its shares for sale, with the
Iraqi bourse seen to be ill-equipped to absorb Asiacell's
Asiacell, which claims to have a 43 percent revenue market
share and 9.9 million subscribers, said the company's founding
shareholders would offer the shares for sale in the IPO, but has
yet to reveal the pricing or whether it will be done on a pro
Those will be crucial factors for Qtel, which in June agreed
to pay $1.47 billion to up its stake in Asiacell to 54 percent
from 30 percent, with the deal including a further increase to
60 percent pending Iraqi government and regulatory approval.
"The IPO might be an opportunity for local shareholders to
cash out, but it doesn't make sense for Qtel to dilute its
holding," said Deutsche's Hammoud.
Qtel's June deal valued Asiacell at about $5 billion.
"That's a good benchmark valuation for the IPO - Qtel
wouldn't buy at that valuation and then sell shares in the IPO
at a lower price," said Hammoud.
Asiacell expects to start trading on the Iraq Stock Exchange
(ISX) on Feb. 3, its statement said, confirming earlier comments
from a company spokesman.
The telecom listings will be the first major IPO on the ISX
since the U.S.-led invasion that toppled Saddam Hussein in 2003.
The bourse's market capitalisation is about $4 billion and
it trades around $3.3 million daily, while in 2011 Nomura
estimated Zain Iraq's enterprise value (equity plus debt) at
"Local investors are flush with cash in Iraq," said Hammoud,
though he questioned whether that situation is enough to support
the Asiacell share sale.
"I wonder whether local investors will put their money in an
equity issue that would value Asiacell as much as the entire
market," he said. "It will be a big change for the local stock
market, and big changes generally imply bigger risks ... or