Zain remains an attractive target

Kuwait's new rules require bidders for above 29.9% of a listed firm shareholders
Kharafi Group's Zain stake is estimated to be 20%
Kharafi Group's Zain stake is estimated to be 20%


Kuwait's Zain should remain for sale despite the death of Nasser al-Kharafi, one of telecom operator's top shareholders and former chairman of the indebted Kharafi Group, says a Reuters report.

"It all depends on who succeeds Kharafi, but Zain is likely to still be up for sale," Irfan Ellam, vice president of Al Mal Capital, Dubai, was quoted in the report. He said that it all depends on the financial situation of the Kharafi Group and the assets could be sold to pay down debts.

Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait, said that Kharafi Group's interests cover real estate, retail and financial services, but these were hit hard by the financial crisis and that it has direct and indirect liabilities likely to total at least $5 billion.

UAE telco Etisalat rejected to buy a 46% stake in Zain amounting to nearly $12 billion in March, from a consortium of shareholders led by the Kharafi Group. The telco stated the political unrest and the effect of the law binding offers that is due to be issued in Kuwait as the main reasons for abandoning the Zain deal. A similar deal with an Indian-led group failed to reach a consensus in 2009.

However, the Reuters report quoted analysts saying that Kharafi's Zain stake, which is estimated to be 20%, was still for sale despite these setbacks and that the shareholder Kharafi's death is unlikely to change this.

It is stated that new Kuwait market rules require bidders for above 29.9% of a listed firm to extend the offer to all shareholders. This could spur Kharafi group to sell just its own stake in Zain, but this would likely command a much lower price because it would not offer management control, the report added.

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