Small shareholders get Zain invite

Minority investors in Zain, subject of the GCC's largest attempted foreign takeover, have been invited to take part in the sale process.

Minority shareholders in Zain, the Kuwaiti company that is the subject of the GCC's largest attempted foreign takeover, have been invited to take part in the sale process. Kuwait's Kharafi Group, which is leading the sale, has told the stock exchange that it will sell a 46 per cent controlling stake in Zain to a consortium of Indian and Malaysian investors.

The company officially owns about 10 per cent of Zain, but is believed by analysts to control up to 25 per cent of the company through its subsidiaries and associates. In advertisements in Kuwaiti newspapers yesterday, a Kharafi subsidiary invited investors owning fewer than 300,000 Zain shares, worth 372,000 Kuwaiti dinars (Dh4.77 million) at yesterday's prices, to participate in the sale. It said all applications coming from such investors would be approved.

"We hope that this preserves the rights and interests of small shareholders and gives them priority," the advertisement said. There are 19,500 such investors, representing 97.8 per cent of Zain's shareholders, Kharafi said, adding that the sale process would be completed by the first week of January. Representatives of the Kharafi Group and Zain did not respond to requests for comment; since the announcement, Zain's management has not publicly acknowledged or discussed the sale. Kharafi told the Kuwaiti stock market that the stake would be sold at a price of 2 Kuwaiti dinars a share, a 61 per cent premium to yesterday's closing price.

But the purchasing consortium, led by India's Vavasi Group and backed by Syed al Bukhary, a Malaysian billionaire, has said that a final price had yet to be confirmed. Two large Indian state-owned telecommunications companies that were originally listed as members of the consortium have since denied making any decision on the deal. The Kuwaiti stock market has reacted sceptically to the sale, with Zain's share price down by more than 20 per cent since news of the deal first emerged.

Many sellers were minority investors, analysts said, concerned that they would not be able to participate in the sale because Kharafi had already assembled the necessary number of shares. Yesterday's announcement gave hope to such investors, but did not halt the company's sliding valuation, with Zain shares finishing the day down by 1.6 per cent. However, it did appear to slow the large-scale selling of Zain stock, with the volume of shares sold yesterday just 5 per cent of the daily average of the past two weeks.