Tuesday, June 17, 2008

Stop Press Muscat Market News. The French bail out of Bank Muscat

Well, 2 big stories on the Muscat Stock Exchange today.

Minnows take a tidy profit
First of all the small shareholders lucky enough to receive their 457 shares in the massively over-subscribed VoltAmp Energy IPO started dumping them onto a market of hungry institutional investors today, after the price as expected bumped up from the (below book) offer price of 540 biasa to a nice 1.5 rial, taking their 500 rial profit. If you were one, congrats. A very easy way to make around $2,500 (because, obviously, both you and your wife registered, right?). So far 11,783,740 shares have traded today. If you know a broker, buy him a beer later. It must have been a pretty hectic morning.

The French bail out of Bank Muscat
But (for me) the real news today was a massive change in the shareholding of Bank Muscat, with the sale of 173.3 million rials worth at a price of around 1.890. That’s almost 8% of the total shares. The sellers were the French bank Societe Generale, and the buyers… apparently the Diwan, otherwise known as The Court of Royal Affairs. Looks to me like the French were, peut etre, un petite miffed at the change in regulations a few days ago hurting their profits (along with the likelihood of more to come), and so the Government bought them out before they made a fuss. Presumably the Government exercised a right of first refusal for the shares.

The Court of Royal Affairs was already Bank Muscat’s largest shareholder, with around 17% of the shares. This will bring them to 24.8%. The Government also indirectly controls another 13% of shares though various State pension funds.

I can’t wait to see the statement from Societe Generale’s Eric Faivre, CEO for the Gulf Region, as to why they have gotten out of Bank Muscat...


  1. I doubt that SG's decision to exit from BankMuscat, a bank which they founded and have guided through close to thirty years, would be for any short term reason such as the CBO's recent tightening of lending norms.

    In January this year when the story broke about SG's massive trading losses in France and their subprime exposure, the first thing that came to my mind was that SG would probably find this a perfect time to exit BM and get close to $500 million to shore up their capital. SG's share of BM's annual profit is minuscule compared to their other operations, but the real value was in the shares themselves.

    I am sure that even without SG on the board at BM, the two banks will continue to have a close relationship.

  2. Muscati,

    Thanks for the comment. I guess that makes sense, $500mln is a tidy piece of capital reinforcement, and a tidy book profit too I would think.

    The Government seems to have earmarked the funds for further Pension fund holdings, although their effective stake is pretty large now at close to 40%.

    Did you fill your boots with VoltAmp? And if so, did you take profit, or are you waiting for the expected 2 rials...?

  3. Actually I only did one Voltamp subscription and I was on holiday in Thailand. I didn't even know that it listed. Tuesday night I was on a bus on the way to Phuket Fantasea when I turned on the WAP browser on my Blackberry and decided to spend my time catching up on blogs with Google Reader when I read your post about the listing. I thought I missed my chance. I emailed my broker and asked him to see if he can get me the same price the next morning. I was surprised when he emailed me the next evening saying he sold at 1.5. It's not much, but it more than covers the room service bills and all my wife's spa pamperings during our week in Phuket :)

    Thanks for the heads up.

  4. Muscat,

    Well done. In hindsight (in my experience by far the best way to trade stocks) I wish I'd done the same.

    My contacts say it should go to 2 rials soon, but profit is profit, so congrats. And no capital gains tax!


If you wish to post anonymously, please pick a nickname by selecting the Name/URL option, or at least sign off your comment with one! I will delete comments I find objectionable or needlessly inflammatory. Sorry for the word verification.... OMG the spam has gotten BAD these past 12 months... trying to avoid making one log in...