Sharia-compliant insurance company Amana Takaful will issue 800,000 shares in an initial public offering (IPO) on the Maldives Stock Exchange (MSE).
In a first for the country, 20 percent of the shares will be made available to expatriates and 15 percent to overseas applicants. The remaining 65 percent will be offered to Maldivians.
The Sri Lanka-based company hopes to generate Rf16 million (US$1.4 million) in proceeds through the IPO, by selling shares at a low issue price of Rf20 (bundled in packages of 25).
Amana Takaful’s board of directors announced the IPO on Monday afternoon at the Nasandhura Palace Hotel.
CEO of Amana Takaful Maldives, Hareez Sulaiman, said the IPO would “change the way the Maldivian Stock Exchange operates as this will be the first time that Maldivians, expatriates and foreigners will be able to purchase securities in a Maldivian listed company.”
The decision to price the shares low “at a price affordable to any average Maldivian” also promised to “be a kick starter for an active stock market which may benefit the entire economy at large,” the company said in an accompanying statement.
The company expects the Sharia-compliant nature of its business to be a key attraction in the market, it noted in its prospectus, with the “growing religious awareness within the domestic market further reinforcing [Amana Takaful Maldives’] decision to embark on expanding its shareholder base in the Maldives.”
Globally, Director of Amana Takaful Osman Kassim, also chairman of the first licensed Islamic bank in Sri Lanka, Amana Bank, explained that Islamic finance was “a phenomenon worth 1.4 trillion and growing at a rate of 20 percent annually.”
It functioned, he explained, through the prohibition of riba, or interest.
“Taking a return without participating in the risk of the return is not allowed, be it 1 percent or 99 percent. Any additional revenue is riba,” he said. “Even if you give a loan and he gives a gift, and is not in the habit of giving a gift, that is also riba.”
Islamic finance in its current form emerged 40 years ago, Kassim explained, first in Egypt and the Arab Emirates.
“It promises to be a just system. Interest is oppression – the charging of something where nothing is due,” he said, noting that in the wake of the global financial crisis, “All major banks now have Islamic financing products, and the more adventurous have their own Sharia Councils.”
Certain terminology used in Islamic finance was now routinely used in normal banking, he said, also observing a rise in financial offerings that were all but labelled Sharia-compliant.
In its IPO prospectus, the company predicted strong potential growth on the back of a higher disposable income as the rufiya eased against the dollar, brought on by a “significant” decrease in the cost of imports.
The key areas of the Maldivian economy – fishing and tourism – had shown strong growth, the company noted. Tourist arrivals grew 18 percent in 2010, while bed nights grew 13 percent even as capacity grew by almost 3000 beds to roughly 24,000.
Fishing was a key area of interest to the company given the high number of insurables. The industry had registered a slight decline in productivity in recent months, the prospectus noted, but nonetheless annual fish purchases had increased 29 percent and fish exports by volume had risen fourfold. Higher prices had led to 77 percent increase in monthly earnings.
The company has set a target of 30-40 percent growth in the Maldives, identifying a key market as the local, atoll and city councils following the government’s policy of decentralistion.
“Considering the current trends in religious conciousness, it is generally believed that the level of awareness and preference for investing in Sharia- compliant investments would be greater at the grassroots level,” the company noted.
It also indicated its intention to offer a micro-insurance product in the Maldives targeting the expatriate market.
The IPO will open on September 20 and close on October 19. The company has pegged a minimum subscription of Rf 2.4 million (US$156,000) or 15 percent to proceed with the IPO.
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Wau they need money? very smart going via religius! I guess this is not fair. using the religion to achuve money! And I don't think of the old history of all religion there is a bank , then today 2011 going to 2012 is the same intention !
Where are the manager+director chairman +money spender living? will be helped the people who are seating be the market ? what is growing every day more !
is this above writen "transpaent" ?
Using the religious card is to deceive primitive Maldivians, who do not understand the stock market.
This is a major scam and all investors seeking participate should immediately refrain!
there is a mention of the issue of a BONUS SHARE once the public offering is completed, the BONUS SHARE is given to both the original shareholders (who invested the required capital to go public - EXPO sri lanka / a mana takaful) and to the new shareholders who bought shares in the IPO.
This essentially means that the original shareholders who put the initial capital gets an IMMEDIATE return on the investment. And they can sell their shares and make a profit that has no cost to them.
This is DAYLIGHT Robbery! and i don't know this IPO got through Capital Market Development Authority.
A bonus share dosent give a return to the original shareholders. Bonus share reduce share price in the same proportion. Bonus shares are issed to make trading easier (easier to buy a share for 20rf than 100rf) and it is a anti-take over mechanism (i.e. market cap increases).
So effectively issue of bonus share dosent create a situation to make profit.
Azim - read the prospectus - page 18
a share premium of Mrf 14,960,000 is issued as bonus shares. and these shares a distributed in proportion with new shareholding
New shareholding is 7% IPO and 93% original shareholders (EXPO and the gang)
Original shareholders only invested MRf 10 million something to take company public.
but in this case, they get 93% of 14.9 million approx equal to 12 million mrf as bonus shares.
Which clearly means, they made a profit over the money they invested FROM THE MONEY THEY RAISED IN THE IPO - THE DHIVEHI GAUMUGE People!!!
What kind of a policy is this!
i can understand your point on share dilution, but the fact remains, these people came in with 10 million mrf and they are now effectively getting Mrf 12 million right away EVEN BEFORE THEY START DOING BUSINESS in this country.
Isn't that DAY LIGHT ROBBERY?
If this was a foreign stock exchange, no one would touch these shares. but since they have declared it in their prospectus, they are not doing anything illegal. its just that we are all too stupid to understand the intecracies of this type of transactions including our poor incompetent govt and CMDA as well.
At a policy level, this should not have happened!!!
AND theres one more thing:
ONE OF THE DIRECTORS OF THIS COMPANY IS RED NOTICED IN INTERPOL FOR FINANCIAL FRAUD! did you know that
amana has been in maldives for eight years you need to check your facts mate.
Alhamdulillah. Sharia based finance and services are growing rapidly all over the world. Its great to have Islamic banking and insurance in Maldive..
Great thing being done for Maldives we need support from our srilankan friends to move our markets and develop insurance in Maldives
we expecting other companies also to list soon
This was long over due for Maldives. We have have an almost dead stock market. We waited for a foreign Company to offer shares at a low price. Whether it is shariah compliant or not I welcome the decision of an international company offering shares at mrf 20. Hope at least the local companies which are to join the MSE to follow such strategy. I also would like to leave a message to the existing listed companies, that is to go for a split immediately to take advantage of the momentum.
We Maldivians living abroad were waiting for this opportunity.
I am sure lots of people like me will welcome this move.
One thing we should not forget is that an active stock market is vital for any economy in the work as that is where more capital creation takes place. By participating in the Share market unknowingly the savings takes place. People who have real interest in the economic development of Maldives have no reason to decline this
The introduction of Shari'ah compliant finance is the need of the hour.. This move is a good first step in getting the public involved...im sure the local authorities are doing their best to make all matters transparent and beneficial to the country..good show!
there is only one maldivian director this should be increased.
hope other insurance companies like allied insurance and telecom companies would list. this would certainly impact on our economy.