STOCKMARKET listings are the last thing Iraq is known for, in particular ones that top $1.3 billion. So many people were paying close attention on February 3rd when Asiacell, one of the country’s big mobile-network operators, was supposed to start trading on the Iraq Stock Exchange (ISX). And there was disappointment when the market debut was delayed by a day because matching the 2,900 orders with the shares on offer proved more difficult than expected.
Yet the hiccup will soon be forgotten. Given the strong investor demand, the flotation is already considered a success. The big question is what the listing will mean for the ISX. Will it encourage more large companies to list their shares and, even more important, attract more international capital to the exchange?
Asiacell—one of whose SIM-card vendors is shown in the the picture above—only listed because it had to. None of the founders really wanted to sell, according to Shwan Ibrahim Taha, chairman of Rabee Securities, the sole distributor for the share sale. But under the terms of Asiacell’s 2007 operating licence the company is required to sell 25% of its shares to the public (although that was, in fact, supposed to have happened by August 2011).
The deal attracted international investors in a way the ISX has not seen before. Of the 67.5 billion shares sold at 22 Iraqi dinars apiece (about $0.02), nearly 60% are thought to have been taken up by foreign buyers. The most enthusiastic were from Gulf countries, where Asiacell’s majority owner Qatar Telecom is already well known. It also helped that Asiacell is profitable and operates in a fast-growing mobile market.
The ISX opened up to foreign investors only in 2007 but has since struggled to attract interest from outside the country. “The success of the Asiacell IPO will encourage other companies to go public on the ISX. We tend to view it as a turning-point,” says Hasan Abdul-Karim, chairman of Aljazera Brokerage Company.
Two other listings of mobile operators will show whether things have indeed changed. Asiacell’s rivals, Zain Iraq and Korek Telecom, have to sell 25% of their shares too. Neither has announced an IPO date yet, but they are also backed by companies well-known to regional investors, namely Kuwait’s Zain Group and France Telecom.
Whether the ISX is attractive and healthy will depend on more than the quality of the companies listed. In a country like Iraq, political instability and violence provide enough reasons for international investors to keep their distance. But the Asiacell listing proves that, if circumstances are right, some can be tempted.