PROSPECTUS Arabia Falcon Insurance Company SAOG

272 Pages·2017·7.87 MB·English

PROSPECTUS

Arabia Falcon Insurance Company SAOG

(Under Transformation)

(P.O. Box 2279, Ruwi 112, Sultanate of Oman.)
Tel: [phone], Fax: [phone]
Web: www.afic.om

IPO of 25,825,415 Shares
Offer Price: Baizas 190 per Offer Share
(Comprising a nominal value of Baizas 100 per Share, premium of Bzs 88 per Share and Offer
expenses of Baizas 2 per Share)

SUBCRIPTION PERIOD
Subscription Opens: 4 March 2018; Subscription Closes: 2 April 2018

FINANCIAL ADVISOR AND ISSUE MANAGER

Ubhar Capital SAOC
P.O. Box 1137, P.C. 111, C.P.O., Sultanate of Oman
Tel: [phone] Fax: [phone]
www.u-capital.net

COLLECTING BANKS LEGAL ADVISOR

Al Busaidy Mansoor Jamal & Co.
P.O. Box 686, PC 112,
Sultanate of Oman
Tel: [phone]; Fax: [phone]
www.amjoman.com

This Prospectus has been prepared in accordance with the requirements prescribed by the CMA. This is an unofficial
English translation of the Prospectus prepared in Arabic and approved by the CMA in accordance with Administrative
Decision no. KH/12/2018 dated 14th February, 2018. The CMA assumes no responsibility for the accuracy and adequacy of
the statements and information contained in this Prospectus nor will it have any liability for any damage or loss resulting
from the reliance upon or use of any part of the same by any person.

This Prospectus does not constitute an offer to sell or an invitation by or on behalf of the Company to subscribe to any of
the Shares in any jurisdiction outside of Oman where such distribution is, or may be, unlawful.
IMPORTANT NOTICE TO INVESTORS

All prospective Applicants are advised to read this notice

The objective of this Prospectus is to present material information that may assist
prospective applicants to make an appropriate and informed decision as to whether or
not to invest in the Offer Shares.

This Prospectus includes all material information and data and does not contain any
misleading information or omit any material information that would have a positive or
negative impact on the decision of whether or not to invest in the Offer Shares.

The Directors of the Company are jointly and severally responsible for the integrity and
adequacy of the information contained in, and confirm that to their knowledge
appropriate due diligence has been conducted in the preparation of, this Prospectus and
further confirm that no material information has been omitted, the omission of which
would render this Prospectus misleading.

All prospective applicants should examine and carefully review this Prospectus in order
to decide whether it would be appropriate to invest in the Offer Shares by taking into
consideration all the information contained in this Prospectus in its proper context.
Prospective Applicants should not consider this Prospectus as a recommendation by the
Company, the Directors, the Issue Manager or the Legal Advisor to buy the Shares. Every
prospective Applicant shall bear the responsibility of obtaining independent professional
advice on the investment in the Offer Shares and shall conduct independent evaluation
of the information and assumptions contained herein using appropriate analysis or
projections.

No person has been authorized to make any statements or provide information in
relation to the Company or the Offer Shares other than the persons whose names are
indicated in this Prospectus to do so. Where any person makes any statement or
provides information it should not be taken as authorized by the Company, the Issue
Manager or the Legal Advisor.

[1]
FORWARD LOOKING STATEMENT
This Prospectus contains statements that constitute statements relating to intentions, future acts
and events. Such statements are generally classified as forward-looking statements and involve
known and unknown risks, uncertainties and other important factors that could cause those future
acts, events and circumstances to materially differ from the way implicitly portrayed within this
Prospectus. The use of any of the words "aim”, “anticipate”, “continue”, “estimate”, "objective",
"plan", “schedule”, “intend”, “expect”, “may”, “will”, “project”, “propose”, “should”, “believe” “will
continue”, “will pursue” and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are not historical facts but reflect current
expectations regarding future results or events and are based on various estimates, factors and
assumptions. The Company believes the expectations reflected in those forward-looking
statements are reasonable, but no assurance can be given that these expectations will prove to be
correct. Moreover, forward-looking statements involve inherent risks and uncertainties and speak
only as at the date they are made and should not be relied upon as representing the Company’s
estimates as of any subsequent date.

The Company cautions prospective Applicants that a number of important factors could cause
actual results or outcomes to differ materially from those expressed in any forward-looking
statements. These factors include, but are not limited to, the following:

 Level of demand for the Company’s products and services;
 The competitive environment and the potential increase in number of competitors;
 Regulatory, legal and fiscal developments;
 Fluctuations in foreign exchange rates, equity prices or other rates or prices;
 The inability to estimate future performance;
 The performance of the Omani economy;
 Inability to successfully implement its strategy, growth and expansion plans; and
 Other factors described under the chapter "Risk Factors" in this Prospectus.

The Company cannot provide any assurance that forward-looking statements will materialize. The
Company, the Issue Manager and the Legal Advisor and any of their respective affiliates disclaim
any intention or obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise unless required by Applicable Law.

For a description of material factors that could cause the Company’s actual results to differ
materially from the forward-looking statements in this Prospectus, see the chapter titled “Risk
Factors” of this Prospectus. The risk factors described in this Prospectus are not necessarily all of
the important factors that could cause actual results to differ materially from those expressed in
the forward-looking statements.

After listing on the MSM, the Company will adhere to the disclosure rules and regulations of the
CMA, which includes making timely disclosure in relation to the Company's financial results. The
Company advises prospective Applicants and the Shareholders to track any information or
announcements made by it after listing through the MSM website at www.msm.gov.om.

[2]
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Financial Data: This Prospectus includes certain projections. The projections are based on the
expectations of external conditions and events relating to the Company, the competitive
environment in Oman and the industry in which the Company operates. These projections are
forward-looking statements that involve inherent risks and uncertainties. Prospective Applicants
are cautioned that a number of important factors could cause actual results or outcomes relating
to the Company to differ materially from those expected in these projections.

In addition, the Issue Manager has not independently verified any of the projections and financial/
other data prepared by the Directors. Please see the chapter “Risk Factors and Mitigants”.

The Company’s Financial Year commences on January 1 and ends on December 31 of each year.

In this Prospectus, any discrepancy between the total and the sum of the relevant amounts listed is
due to rounding.

Currency of Presentation: All references to “RO” are to Omani Rial, the official currency of Oman.
The Omani Rial is pegged to the U.S. Dollar and the pegged exchange rate is RO 1 = US Dollar
2.6008. RO 1 is composed of 1,000 Baizas.

Summary or Extracts of Documents: Any summaries of documents or extracts of documents
contained in the Prospectus should not be relied upon as being comprehensive statements in
respect of such documents.

Industry and Market Data: Industry and market data in this Prospectus has been obtained from
third parties or from public sources such as websites and publications. Neither the Directors of the
Company, the Issue Manager nor the Legal Advisor have independently verified any of the data
from third party sources referred to in this Prospectus or ascertained the underlying assumptions
relied upon by such sources. In addition, the Issue Manager or the Legal Advisor has not
independently verified any of the industry data or other sources referred to in this document.
Therefore, its accuracy and completeness is not guaranteed and its reliability cannot be assured.
The extent to which the Industry and Market data used in this Prospectus is meaningful depends
on the reader's familiarity with and understanding of the methodologies used in compiling such
data.

ADDITIONAL POINTS TO BE NOTED

Scope of Information: The information contained in this Prospectus is intended to provide a
prospective Applicant with adequate information relating to the investment opportunity and
background information on the IPO referred to in this Prospectus. However, this Prospectus does
not necessarily contain all the information that a prospective Applicant may consider material. The
content of this Prospectus is not to be construed as legal, business or tax advice. Each prospective
Applicant should consult his own lawyer, financial adviser or tax adviser for legal, financial or tax
advice in relation to any subscription, purchase or proposed subscription or purchase of the Shares.

Investor Due Diligence: Prior to making any decision as to whether to subscribe for the Shares,
prospective Applicants should read this Prospectus in its entirety. In making an investment
decision, prospective Applicants must rely upon their own examination of the terms of this
Prospectus and the risks involved in making an investment.

[3]
Equity Risk: All equity investments carry market risks to varying degrees. The value of any security
can fall as well as rise depending on the market conditions. Prospective applicants should read
the chapter related to “Risk Factors and Mitigants” of this Prospectus.

Restrictions on Distribution of this Prospectus: The distribution of this Prospectus and the Offer
Shares may, in certain jurisdictions, be restricted by law or may be subject to prior regulatory
approvals. This Prospectus does not constitute an offer to sell or an invitation by or on behalf of the
Company to subscribe to any of the Offer Shares in any jurisdiction outside of Oman where such
offer or invitation would be unlawful. This Prospectus may not be distributed in any jurisdiction
where such distribution is, or may be, unlawful. The Company, the Issue Manager, the Legal
Advisor and the Collecting Banks require persons into whose possession this Prospectus comes to
inform themselves of and observe, all such restrictions. None of the Company, the Issue Manager,
the Legal Advisor or the Collecting Banks accept any legal responsibility for any violation of any
such restrictions on the sale, offer to sell or solicitation to subscribe for Offer Shares by any person,
whether or not a prospective Applicant, in any jurisdiction outside Oman where such sale, offer to
sell or solicitation to subscribe would be unlawful.

Restrictions on use of Information Contained in this Prospectus: The information contained in this
Prospectus may not be published, duplicated, copied or disclosed in whole or in part or otherwise
used for any purpose other than in connection with the Offer, without the prior written approval of
the Company and the Issue Manager.

Disclaimer of Implied Warranties: Except as required under Applicable Law no representation or
warranty, express or implied, is given by the Company, the Issue Manager, the Legal Advisor or the
Collecting Banks, or any of their respective directors, managers, accountants, lawyers, employees
or any other person as to the completeness of the contents of this Prospectus; or of the projections
included within; or of any other document or information supplied at any time in connection with
the Offer; or that any such document has remained unchanged after the issue thereof.

[4]
TABLE OF CONTENTS
TABLE OF CONTENTS 5
1. ABBREVIATIONS AND DEFINITIONS 6
2. OFFER SUMMARY 10
3. ESTIMATED OFFER EXPENSES 14
4. PURPOSE OF THE OFFER AND USE OF OFFER PROCEEDS 15
5. OBJECTS AND APPROVALS 16
6. SHAREHOLDING DETAILS 21
7. OMAN ECONOMIC OUTLOOK 29
8. OMAN INSURANCE SECTOR OVERVIEW 34
9. DESCRIPTION OF THE COMPANY AND BUSINESS OVERVIEW 43
10. RISK FACTORS AND MITIGANTS 62
11. SOURCE OF FINANCING 75
12. HISTORICAL FINANCIAL STATEMENTS 76
13. ASSUMPTIONS TO PROJECTED FINANCIALS 81
14. PROJECTED FINANCIAL STATEMENTS 89
15. AUDITED FINANCIAL STATEMENT – FOR THE PERIOD ENDED 31ST AUGUST 2017 90
16. UNAUDITED FINANCIAL RESULTS – FOR THE PERIOD ENDED 30TH NOVEMBER 2017 91
17. DIVIDEND POLICY 92
18. VALUATION AND PRICE JUSTIFICATION 94
19. RELATED PARTY TRANSACTIONS AND MATERIAL CONTRACTS 100
20. CORPORATE GOVERNANCE 105
21. RIGHTS AND LIABILITIES OF SHAREHOLDERS 119
22. SUBSCRIPTION CONDITIONS AND PROCEDURES 123
23. UNDERTAKINGS 131

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1. ABBREVIATIONS AND DEFINITIONS
AGM Annual general meeting of the Shareholders convened
and held pursuant to Article 120 of the CCL
Al Anwar Holding Al Anwar Holdings SAOG
Applicable Law Applicable laws and regulations in Oman as in force on
the date of this Prospectus
Applicant Eligible person who applies for the Offer Shares
pursuant to the terms of this Prospectus
Application The Application Form duly filled and submitted to the
Collecting Bank(s) together with the Application Money
as specified in the Chapter “Subscription Conditions and
Procedures” of this Prospectus
Application Form The printed application form to be used to apply for the
Offer Shares pursuant to the terms of this Prospectus.
These forms will be available at the branches of the
Collecting Banks

Application Money The Application Money is equal to the amount in Omani
Rials, equal to the number of Shares applied multiplied
by the Offer Price per Share.

This amount has to be paid by an Applicant at the time
of submission of his/her duly completed Application
Form as specified in the Chapter “Subscription
Conditions and Procedures” of this Prospectus.

Arabia Holding Arabia Holding S.A.L (Holding Company)
Arabia Insurance Arabia Insurance Company S.A.L.
Arabia Insurance Oman Branch Arabia Insurance Company S.A.L-Oman Branch
Articles The Company’s articles of association (as amended
from time to time) registered with the MOCI
Baiza(s) One thousandth of an Omani Rial (Baizas 1,000 = RO 1)
Board The board of directors of the Company elected and
holding office in accordance with the Articles, the CCL,
the Code and the Rules and Conditions for Election of
Directors of Public Joint Stock Companies and their
Responsibilities (Ministerial Decision 137/2002, as
amended)
CAGR Compounded annual growth rate
Capital Market Law The Capital Market Law of Oman promulgated by
Royal Decree Number 80/98 (as amended)
CBO Central Bank of Oman
CCL The Commercial Companies Law of Oman promulgated
by Royal Decree Number 4/74 (as amended)
CEO The chief executive officer of the Company
[6]
Chairman The chairman of the Board
CMA The Capital Market Authority of Oman
Code The CMA code of corporate governance for SAOGs
issued in July 2015 and updated in December 2016
Collecting Bank The banks appointed to receive the Applications during
the Subscription Period
Company or “AFIC” Arabia Falcon Insurance Company SAOG (Under
Transformation)
Consolidation Consolidation of the business and operations of FIC
and Arabia Insurance Oman branch, undertaken
through simultaneous completion of (i) purchase by
Arabia Holding and Lawrence Investments of
3,471,776 Shares of the Company from the certain
Shareholders, at a price of RO 1.876 per share and (ii)
acquisition by the Company of the insurance portfolio,
business, assets and liabilities of Arabia Insurance
Oman Branch

CPI Consumer price index
DCF Discounted cash flow methodology for valuation
Directors The members of the Board
EGM Extraordinary general meeting of the Shareholders
Executive Regulations Executive Regulations of the Capital Market Law issued
vide Administrative Decision No.1/2009 of the CMA (as
amended)
FIC or Falcon or Falcon Insurance Falcon Insurance Company SAOC, subsequently
renamed as Arabia Falcon Insurance Company SAOC
after the Consolidation

Financial Year The period of twelve months starting on January 1 and
ending on December 31 of that particular year
GCC The Gulf Cooperation Council which is composed of
Oman, United Arab Emirates, Saudi Arabia, Qatar,
Bahrain and Kuwait
GDP Gross domestic product
Government The government of Oman
IFRS International Financial Reporting Standards
IMF International Monetary Fund
Independent Director A Director who qualifies as an independent director in
accordance with the criteria laid down in the Code
Insurance Law The Insurance Law, promulgated by Royal Decree 12/79
as amended and decisions and regulations made
pursuant thereto
IPO Initial public offer of the Offer Shares
Issued and Paid Up Share Capital Issued and paid up share capital of the Company from
time to time
[7]
Issue Manager Ubhar Capital SAOC (or U Capital)
Lawrence Investments Lawrence Investments LLC
Legal Advisor Al Busaidy, Mansoor Jamal & Co
Management The senior management of the Company
MCD Muscat Clearing and Depository Company SAOC
MENA Middle East North Africa
MOCI The Ministry of Commerce and Industry of Oman
MSM Muscat Securities Market
NCSI National Centre for Statistics and Information, Oman
OGM An ordinary general meeting of the Shareholders
Offer The offer for sale of the Offer Shares to the public as
described in this Prospectus
Offer Closing Date The closing date of the Offer, which is described in the
Chapter “Subscription Conditions and Procedures” of
this Prospectus
Offer Opening Date The opening date of the Offer, which is described in the
Chapter “Subscription Conditions and Procedures” of
this Prospectus
Offer Price The price at which each of the Offer Shares is being
offered for subscription through this Prospectus
Offer Proceeds The proceeds of the Offer
Offer Shares The Shares being offered for subscription of the Offer
through this Prospectus
Oman The Sultanate of Oman
OMINVEST Oman International Development and Investment
Company SAOG
ONIC Holding the erstwhile Oman National Investment Corporation
Holding SAOG
PB Price to book value per share
PE Price earnings ratio
Prospectus This prospectus for the IPO of the Offer Shares
RO Omani Rial, the lawful currency of Oman
SAOC Omani Closed Joint Stock Company
SAOG Omani Public Joint Stock Company
Selling Shareholders The shareholders who are offering their shares as per
details provided in Chapter 6 - Shareholding Details of
this document
Shares/ Ordinary Shares The equity shares of the Company of nominal value Bzs
100 each
Shareholders The share holders of the Company as registered with the
MCD.
[8]
Subscription Period The period between the Offer Opening Date and the
Offer Closing Date inclusive of both days during which
an Applicant can submit an Application Form
Takaful An agreement between a group of participants to
support one another jointly for losses arising from
specified risks in accordance with the rules and
principles of Islamic Shari'a
[9]