AHB says no to BankMuscat

Merger offer rejected as AHB board considers other options

The merger proposal that Alliance Housing Bank (AHB) received from BankMuscat in May was rejected within five days of the former receiving the offer letter. An official communication from AHB said, “At present, AHB’s board is evaluating various strategic options and offers, and thus we are unable to accept BankMuscat’s proposal.”

BankMuscat had offered a price of 375bz per share or 2.61 times the book value as on March 31, 2007. This represented a 34 per cent premium on the closing share price on May 3. The ratio of the equity swap was one BM share for 3.13 shares of AHB.

Besides BankMuscat, AHB has other parties from the region interested in it, one of which is the heavyweight US$21bn Ahli United. Another one is from the UAE (Dubai Bank) and the third is a bank from Qatar. It has also been confirmed that Oman Arab Bank is in talks with AHB, though no price has been offered as yet. As we got to press, BankMuscat had just held a presentation further detailing its offer for AHB shareholders.

e-ticketing headway for Oman

The International Air Transport Association (IATA) recently announced that global electronic ticketing (ET) penetration in its billing and settlement plans (BSPs) stands at 79 per cent. The deadline for 100 per cent ET is December 31, 2007. During the first quarter of the year, the largest increase in ET volumes issued by airlines occurred in the Middle East and North Africa (MENA). Within the region, the highest ET use is in Morocco (62 per cent), followed by Oman (60 per cent), Qatar (57 per cent) and Egypt (55 per cent). In the Middle East, nine airlines have implemented a total of 91 interline ET agreements.

Oman pulls out of Gulf Air

The Omani government has withdrawn from Gulf Air, leaving the Bahraini government the sole owner of the airline. The sultanate’s formal withdrawal was conveyed by H E Ahmed bin Abdulnabi Macki, Minister of National Economy and deputy chairman of the Financial Affairs and Energy Resources Council, to Bahrain's deputy ruler Sheikh Salman bin Hamed al Khalifa. After the decision was conveyed, Gulf Air’s board of directors held an impromptu meeting with representatives from both countries to discuss the transfer of Oman’s shares and assets.

Gulf Air was founded in 1950 by four Gulf states - Oman, Abu Dhabi, Qatar and Bahrain. However, Qatar withdrew in 2002 and Abu Dhabi in 2005. Gulf Air’s newly appointed chief executive officer Andre Dosè had said in April that the carrier was losing more than a million dollars a day, and had unveiled a plan to cut its fleet and jobs. The airline had also announced that its predicted debt to the end of 2007 would amount to US$67mn.

Hospitality high

The Wave Muscat and Kempinski Hotels ink deal

The Wave Muscat, Oman’s leading tourism and beachfront residential development, announced that Kempinski Hotels, one of the leading luxury hotel groups worldwide, has signed up for a beachfront property at the development. An agreement to this effect was signed at a ceremony at the Emirates Palace Kempinski Hotel in Abu Dhabi. The signing ceremony was attended by officials of Kempinski Hotels, The Wave and the Majid al Futtaim Group, one of the main investors in The Wave. The hotel is expected to be completed by 2010.

Speaking on the occasion, H E Abdulla bin Abbas bin Ahmed, chairman of the board of directors, The Wave, said, “The partnership between the world-renowned Kempinski Hotels and The Wave is yet another important milestone in creating our landmark destination. The Wave epitomises the aspirations and culture of Oman and we are committed to delivering exceptional residential, retail and leisure facilities.”

He added, “With the expertise on offer from our strategic partners like Kempinski Hotels, the development joins the league of top community projects in the Middle East. Our tie-up with Kempinski is part of our vision to involve the finest companies in the field.”

Kempinski will mark its entry into Oman with the new property. Said Ulrich Eckhardt, VP, development, at Kempinski Hotels, “We are delighted to be part of The Wave Muscat. Kempinski has entered the regional resort market in response to growing consumer demand even as we continue to maintain our leadership in the business travel market, endorsed by our renowned properties in many of the world’s key cities.”
He added, “Our foray into Oman and presence at this unique development reinforces our expansion plans in the Middle East.

Breaking new ground 

Ascent Medical Technology Fund and SMSCo’s medical device manufacturing centre will be a regional first

US-based Ascent Medical Technology Fund II has entered into a joint venture with the Oman-based Salalah Medical Supplies Manufacturing Company (SMSMCo) to open a medical manufacturing centre in Salalah. The joint venture company, created by SMSMCo and the fund, will be called Salalah Medical Device Manufacturing. The joint venture will have the capability to manufacture therapeutic devices and develop prototypes for new device concepts in the Middle East. It will be a first for the region.

Says fund advisor Peggy Farley, president and CEO of Ascent Capital Management, "This is the first step in building an internationally competitive medical technology industry in the Middle East.” Given the intellectual and financial capital in the region, Farley feels that the (new) industry has the potential to rival that of the US. “Our venture in Salalah will draw upon medical and engineering talent, focusing in a few years on innovation emanating from the region, to become one of the  leading manufacturing centres for the medical industry. Out of that will come cutting edge technology that will change the way that serious global health issues are addressed.”

It will begin operations with product development and the manufacture of guide wire products and surgical kits. The venture’s primary aim is to build value-added medical device products for the US, European and GCC markets. “These goals fit the Omani vision of building in-country value-added manufacturing. Through Oman’s Free Trade Agreement, it also allows US and European entities to benefit from low cost labour rates.”

BDP in JV with Mustafa Sultan enterprises

BDP International, a global logistics company specialising in supply chain management, has announced the launch of its operations in Oman in a joint venture with Mustafa Sultan Enterprises (MSE). The new company will be known as Arshhiya Logistics, and the services offered by it will include international freight forwarding, project logistics as well as custom-house brokerage. Present at the launch function were Richard Bolte, president, BDP International; Ajay Mittal, director BDP India and Middle East; Akbar Sultan, managing director, Mustafa Sultan Enterprises; and Minoo Saher, group CEO, Mustafa Sultan Enterprises, along with other top officials from the associating firms.

Jotun launches Lady brand

Leading paint manufacturer, Jotun, has launched its Lady brand of interior paints in the sultanate. Vijay Kumar, managing director, Jotun Paints (Oman), told a press conference held recently that the launch of the Lady brand follows two years of extensive research at the regional R&D laboratory based in Dubai. 

The new paint is targeted at discerning female consumers and families. It will be easy to clean, have a neutral scent and lasting colour. Jotun sales and marketing manager, Tore Myrvang, said that it was being launched all over the Middle East keeping in mind the tastes and requirements of upmarket users.

OMAN DEVELOPMENT BANK HONOURED BY ADFIAP

Oman Development Bank (ODB) chairman H E Yahya al Jabri recently received an award as a development banker for his contribution to the economic development of Oman from the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP). A panel of independent judges consisting of experts from development financing institutions decided on the winner of the award after a comprehensive assessment of the credentials and achievements of the various nominees.

The award was in recognition of ODB’s achievements in the past three years as the premier development financing institution in Oman. H E Jabri attributed the success to the forward looking vision of the board of ODB and the new re-engineering projects implemented by the bank’s management. These projects include streamlining branch operations, developing human resources, upgrading the IT systems, developing efficient policies and procedures, and focusing on recoveries.

ODB was set up in 1997, and after its early successes, had its share of troubles with a very high level of non-performing loans.  However, since 2004, the bank has recorded an impressive turnaround and growth. Compared to 2004, in 2006 loan disbursements have grown by 269 per cent and net profit has increased from RO1.45mn to RO3.74mn.

More the merrier

Bank Sohar launches Al Mumayaz saving scheme 

Bank Sohar’s Al Mumayaz savings scheme offers customers a chance to win a number of prizes, including a mega prize of RO100,000. In addition, customers can win RO20,000 and a Lexus every month. Five lucky winners also get a chance to win a shopping voucher every month (which can be redeemed at City Centre). Finally, there are free fuel vouchers for five customers every month. The minimum amount needed to open an account with the bank is RO5.

The scheme comes with a few riders – a minimum balance of RO100 is required in the savings account to participate in the prize draw.  Says Nani Javeri, CEO, bank Sohar, “Al Mumayaz gives people a number of choices to meet their financial needs.” He added that  the bank would also announce an interest bearing account in the future.

Crowne Plaza in Sohar

The InterContinental Hotels Group has announced the development of a third Crowne Plaza hotel in Sohar. The hotel, developed by owners SAMCO Trading and Contracting, will be located on a hilltop in close proximity to the Sohar Industrial Port Company project. Planned to open at the end of 2007, the 126-room Crowne Plaza Sohar will be the first internationally branded hotel in the area. It will feature a diverse mix of food and beverages; leisure, commercial and service outlets; a lobby-level patisserie; a sports bar; poolside dining; as well as a banquet hall that will cater for up to 400 guests.

Zubair Corporation inks deal for US$100mn corporate loan

The deal helps the company, celebrating its 40th anniversary this year, broad base its banking relationships

The Zubair Corporation has tied up a corporate loan of US$100mn from a consortium of local and regional banks. The documentation signing ceremony was held recently at Shangri-La’s Barr Al Jissah Resort and Spa and attended by senior representatives of the consortium members which includes Arab Bank, Bahrain; Arab Banking Corporation, Bahrain; BankMuscat, Oman; Gulf International Bank, Bahrain and National Bank of Dubai, UAE.  Each bank will contribute US$20mn. The Oman Arab Bank is acting as the on-shore security agent.

According to company officials, the present corporate loan deal is an important step by the family owned business into the syndicated loan market. Moreover, the deal also helps the company, which is celebrating its 40th anni-versary this year, in broad basing its banking relationship in the region. Consequently, it augurs well for its expansion plans. The deal comes on the heels of the conclusion of a US$146mn term loan refinancing for the Zubair Corporation’s joint venture project with the government of Oman, namely, Barr al Jissah Resort Company.

Al Buraimi joins Oman Air

Oman Air’s fleet now consists of five B737-800s and three B737-700s

Named after the Omani governate bordering the United Arab Emirates, Al Buraimi, Oman Air’s new B737-800NG, landed at Seeb airport in early May. With the joining of this aircraft, originating from Seattle, Oman Air’s fleet now consists of five B737-800s and three B737-700s. Says Ziad al Haremi, CEO of Oman Air, “This step is in line with our plan to prop up and upgrade the company’s fleet for short and medium hauls. It also facilitates attaining all the advantages of operating the Boeing 737 aircraft in terms of efficiency and cost saving thus ensuring Oman Air’s presence on the map of the regional aviation industry.” Describing the Boeing 737 NG as the most technologically advanced airplane in its class, Haremi said that it would certainly enable better-quality services, and contribute in making Oman Air the best choice for valued passengers.

He continues, “Its features promoted the company to increase the number of this aircraft type, which goes with the capacities of our sectors by providing the necessary flexibility to plan convenient flights timings.” 

Haremi adds that the Boeing 737, which is considered for short and medium hauls, follows Boeing’s essential philosophy, which is to ensure added value to airlines with the ability to provide reliability, simplicity and reduced operating and maintenance expenses. “These aircraft will stimulate our future operations and growth, and we consider them as a step forward towards the introduction of the wide body aircrafts to reach long haul destinations in the near future. Also, it will provide more convenient connections, particularly now that we are on the verge of the summer season, where our frequencies will increase to all major destinations.”

Omasco at BUILDEX 2007

Oman Marketing and Services Company (Omasco) participated at the recently conclu-ded Interiors and Buildex 2007 where its projects and engineering division showcased its comprehensive product range including wall-mounted ACs, cassette ACs, ducted ACs and ceiling floor type ACs.

Says Michael E Hansen, managing director, Omasco, “Our participation in the event is a reflection of the company’s contribution towards the Omani market’s diverse industrial and home requirements.” The Consumer Electronics division had on display an array of high-technology products from Panasonic, GE, Xper and Black and Decker. The main focus was on kitchen appliances. For the first time, the Induction Heater (IH) Cooktop was on display. Besides appliances, intercom systems, hand dryers and phones were also on display, as were Panasonic’s commercial microwaves, GE’s latest washing machines and dishwashers and Xper’s freestanding cookers.

Riding the wave

Vision Investment Services Company has launched its newest offering Vision Emerging Oman Fund (The Fund), an open-ended fund that will exclusively invest in the Muscat Securities Market (MSM). The initial subscription period of The Fund is from May 20 to June 19 and subscription is open to Omani and non-Omani investors. The investment objective of The Fund will be to achieve growth through capital appreciation and dividends by investing in equities listed and/or to be listed on the MSM.

Says Mustafa Ahmed Jaffer, executive director of Vision, “The Fund will be managed by a team of professionals specialising in asset management and will be regulated by the Capital Market Authority, Oman. The strategy of The Fund will be in line with our investment strategy for discretionary portfolios.” He added that with its structured and process oriented investment strategies, Vision has been successful in consistently outperforming the benchmark MSM index and has delivered a cumulative return of 575 per cent over the last five years.

Kuwait drops dollar peg

Following the move, the Kuwaiti dinar immediately strengthened against the dollar

Kuwait switched its dinar’s exchange rate mechanism to a basket of currencies in late May, dropping a peg to the tumbling US dollar that was adopted in 2003. Central Bank of Kuwait governor Sheikh Salem Abdul-Aziz al-Sabah, said in a statement carried by state news agency KUNA, “The massive decline in the dollar’s exchange rate against main currencies has contributed to the increase in local inflation rates and this step is part of the central bank’s efforts to curb inflationary pressure.” Following the move, the dinar immediately strengthened against the dollar. 

 Sheikh Sabah added that until the completion of all the requirements to achieve the currency union and the launch of the Gulf currency, the Central Bank of Kuwait would continue to adopt the basket system. But the move has raised doubts about plans for a single currency in the Gulf region.

In 2003, Kuwait became the last of six Gulf countries including Saudi Arabia to peg its currency to the dollar in readiness for a single currency planned for 2010. The Kuwaiti dinar was trading at the top of a 3.5 per cent permitted band set when the dollar peg was established in January 2003.

In 2007, Kuwait’s finance minister Bader al Humaidhi had hinted that the country was considering revaluing its dinar and was also weighing the benefits of keeping the currency pegged to the falling dollar. Kuwait’s currency had come under intense pressure from speculators betting that the country’s central bank would allow it to appreciate against the dollar to curb inflation and soak up some of the cash pouring into its oil-rich economy. Inflation in Kuwait has been running at 3-4 per cent in the past nine months. This, when compared with a historical average of less than two per cent, had raised concerns.