On Thursday, 3 December 2020, QLM Life and Medical Insurance Company (“QLM”) announced its intention to obtain a public listing on the Qatar Exchange through an initial public offering (IPO). The IPO will give eligible investors, namely, individual Qataris and companies registered with the Qatari Ministry of Commerce & Industry, the opportunity to invest in and share in the future success of Qatar’s largest life and medical insurance company.
Commenting on the launch of the IPO, Mr. Salem Al Mannai, the Group CEO of Qatar Insurance Group and the authorized representative of QLM’s founding shareholders noted: “Over the years, QLM has gained a major market share in the Life & Medical insurance business and has become one of the leading life and health insurers in the State of Qatar and the wider GCC region. This Initial Public Offering is another milestone on the path towards achieving our growth trajectory”
QLM’s management decided to launch the IPO of QLM for the following reasons:
- The Company has reached operational maturity, is in excellent financial condition, enjoys strong profitability and high dividend paying capacity
- QLM’s major shareholder, QIC, has been evaluating the option to IPO QLM and believes now is the appropriate time for QLM from an operational and commercial standpoint
- In addition, QLM is fulfilling the regulatory requirement to become publicly listed within a stipulated timeframe
- Global and local market sentiment has improved, with the QE Index currently trading at a positive year-to-date performance
- QIC and QLM’s other founders will retain a significant shareholding of 40% post-IPO, believing in the continued success of QLM
In order to facilitate the offering, QLM will be directly converted from a limited liability company into a public shareholding company. More recent IPOs in Qatar used a different structure to offer the shares, which used a new company vehicle structure. Based on the conversion, QLM’s share capital book value and number of shares will remain equal to the historical value. The Company’s market capitalization at IPO is QAR 1,099,000,000. The Offer Shares are accordingly being offered for subscription at QAR 3.15, consisting of the nominal value of QAR 1.00, a premium of QAR 2.14 and the Offering and Listing Fees of QAR 0.01.
QLM has priced the Offer shares at a premium to its book value for the following reasons:
- Retained earnings: QLM has enjoyed continuous profits since its establishment over 9 years ago. As a result, QLM has accumulated sizeable undistributed profits, reserves and surpluses on its balance sheet over and above its share capital. IPO investors will have access to these resulting in an offer price with a premium over the historical book value.
- Track record of profitability: QLM has been among the leaders in profitability in the regional insurance industry. Given its strong market footprint, dominant market share, unrivalled IT and operational platforms and healthy capital position, the Company is expected to continue to generate strong profits and distribute dividends to its shareholders in accordance with its dividend policy.
- Global norms on IPO pricing: Pricing IPOs at premiums to historical book values for businesses with successful track records is a common practice in the international capital markets. Historically in Qatar, IQCD and Mannai were listed at a premium to their respective book values
- Reduced listing fees: Comparing the conversion structure to the new company vehicle structure, the conversion structure applied in QLM’s IPO provides cost savings to investors as the offering and listing fees are lower.