Mesaieed Petchem shares soar in Qatar's first listing since 2010

Reuters Middle East

* Stock rockets 450 percent from IPO price

* Ends at nearly three times fair-value estimates

* Government made offer very attractive to local citizens

* Part of efforts to spread wealth, combat corruption

* Clears way for more IPOs of state firms (Adds share price close, context, comment on political implications)

By Nadia Saleem and Amena Bakr

DUBAI/DOHA, Feb 26 (Reuters) - Shares in Qatar's Mesaieed Petrochemical Holding Co soared 450 percent on Wednesday in the country's first stock market listing since 2010, far exceeding analysts' estimates of fair value.

The spectacular debut reflected bullish investor sentiment towards Qatar, but was also the result of lavish government efforts to make the stock attractive to local citizens.

Mesaieed shares closed at 55.00 riyals, up from their initial public offer price of 10.00 riyals, after hitting a peak of 73.90 riyals during the day. The company became the exchange's third biggest stock by market capitalisation.

Securities analysts' valuations of the stock ranged between 18 and 21 riyals, Ahmed Shehada, head of trading at QNB Financial Services, said before the listing.

Mesaieed, a unit of state-owned Qatar Petroleum (QP), raised 3.2 billion riyals ($880 million) in an IPO of about 26 percent of its shares. The offer, which authorities said was heavily oversubscribed, was open only to Qatari investors; foreigners can buy up to 15 percent of the firm from the market.

Fund managers said Qatari retail investors who had not succeeded in buying enough of the shares during last month's IPO were piling into the stock on Wednesday.

Most institutional investors, which were excluded from the IPO, missed the stock's initial jump and have also been deterred by a lack of extensive analyst research on Mesaieed. So they are for now largely staying away from the stock, fund managers said.

"Being a unit of QP, it will attract investors and retail liquidity will drive the stock for the coming period," said Reda Gomaa, portfolio manager at Mashreq in Dubai.

APPETITE

Mesaieed holds stakes in ventures that make polyethylene, caustic soda and other chemical products. Its partners in the ventures include U.S. company Chevron Phillips Chemical Co . These stakes generated combined revenue of 4.3 billion riyals and net profit of 1.6 billion riyals in 2012.

Retail investors' strong appetite for Mesaieed's shares underlined a sharp recovery of Gulf financial markets from the global credit crisis over the past year. Qatar's main stock index is up 42 percent since the end of 2012; last October, Dubai listed its first new stock in four years.

The success of Mesaieed's listing is likely to pave the way for more IPOs in Qatar. The government of the tiny state, which has a population of about 2.1 million, roughly 250,000 of whom are Qatari nationals, wants to use IPOs to develop its financial markets and spread its natural gas wealth among its citizens.

The Mesaieed offer is indirectly linked to an official campaign against corruption being pushed by its new ruler Sheikh Tamim bin Hamad al-Thani, said a source close to the IPO. Authorities want Qataris to feel they have direct access to profits from the country's natural resources, limiting their concern about where the money is going.

Energy minister Mohammed Saleh al-Sada said in December that including Mesaieed, Qatar planned to conduct IPOs worth 50 billion riyals in its stock market over the next 10 years.

The government structured the Mesaieed offer very attractively to ensure interest among Qataris. It bought 750 shares as a gift for each disadvantaged Qatari - those receiving social insurance payments and people with special needs - and promised its citizens allocations of free shares in coming years if they hold on to the bulk of their purchases in the IPO.

This promise may have created a supply squeeze that pushed up the stock price on Wednesday. Only 11 million shares were traded out of 323 million sold in the IPO, suggesting many investors held on to them, limiting the supply for buyers.

Qatar's stock market, with a capitalisation of about $175 billion, is preparing for a new influx of foreign money in May, when international equity index compiler MSCI has said it will upgrade Qatar to emerging market from frontier market status. (Editing by Andrew Torchia)

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