When the opening bell rings on the latest addition to Palestine's stock exchange in the new year it will sound a positive note for future sales of shares on the minnow of Middle East bourses.
Wataniya, the Palestinian Territories' second-biggest mobile phone operator, raised US$78 million (Dh286.48m) in its initial public offering (IPO), one and half times more than the $50.3m it needed to raise to float its shares on the Palestine Exchange. Much of this interest was captured in the first two weeks of listing.
It is the largest IPO in Palestine for 10 years and based on a fixed price of $1.30 per share. Ahmad Aweidah, the chief executive of the Palestine Exchange, said the IPO was a "big deal" for the country's bourse, although any excess shares bought will be refunded to the investor.
"I think this is one of the most successful [telecommunications] IPOs in the Arab world," he said.
"It means a lot to the exchange," said Mr Aweidah, who added that he expected Wataniya, majority-owned by Qatar Telecom (Qtel), to be a market heavyweight on the exchange. The IPO represents 15 per cent of the company and, based on the offer price, its market capitalisation is forecast to reach $338m. Wataniya joins 40 companies traded on the Palestinian exchange.
Its first day of trading will be January 9.
The Palestine Exchange has grown its market capitalisation from about $200m last year to about $3.4 billion today - although it remains once of the least active stock exchanges in the region, data from the Arab Monetary Fund show.
Despite limited turnover on the market, the potential for mobile penetration in the Palestine Territories is high, with a mobile penetration rate of just 49 per cent at the end of last year, one of the lowest in the Middle East. But coupled with high literacy rates and a young population, there are good opportunities for growth.
"Mobile telephony is generally hot in the Arab world, but in the Palestinian market, there is great potential for growth with more than half of the population still under 15. The market still has a long way to go in terms of subscriber base," Mr Aweidah said.
"Some companies were worried about the market conditions and even though they didn't tell me, I knew they were holding off their IPO."
Many family-owned companies that have held back from going public will think again about listing after Wataniya's success, he said.
Dr Bassam Hannoun, Wataniya's chief executive, said its IPO was a "tremendous vote of confidence by Palestinian and international investors".
The majority of interest came from retail investors from the Palestinian Territories, although there was also interest from the rest of the Middle East and European-based institutional investors, with almnost 14,000 applying for shares.
To protect retail investors the regulator, the Palestine Capital Market Authority (PCMA), requires the first 300 shares of all subscribers to be allocated in full, with the remainder spread out to investors on a pro-rata basis.
This means each investor will receive at least 300 shares of Wataniya.
But the boost to the exchange has not come as a surprise. The operator launched in November last year and has captured 20 per cent of the mobile market share already, coming only second to PALTEL, the primary telecommunications operator in the Palestinian Territories, which is dual-listed on the Abu Dhabi Securities Exchange General Index and the Palestinian index.
The company plans to launch another 15 per cent tranche of shares in the next few years, reducing the stakes held by Qtel and Palestine Investment Fund to 40 per cent and 30 per cent, respectively.
