Case Study 1: Mahri LLC's famous for hotel and office accessories supplies and are spread over in many important cities of Middle Eastern countries. They have 45 branches providing wide range of accessory items mostly in hotel industry. Over a period of time they even included gym equipment to their product list. Such a huge growth happened within 7 years of its commencement. Along with it they also have a dedicated website named Mahri LLC bookings for all kinds of bookings including flight, hotels and many other. Both the businesses are producing good profits. Huge customer base and support encouraged the partners to try their part in mobile accessories industry producing headsets, phone guards and covers using radiation control materials. The owners of the company know many mobile phone accessory producers are already producing such products and selling in the market. Despite all these, the owners believe that they have a better understanding of the customers' requirements which gives immense confidence to the owners to foray into the business. Feasibility report indicated a huge positive and optimistic growth for the industry. The feasibility study revealed that nearly 150 to 200 new direct and indirect jobs can be created within a quick period of time of its establishment. Market report suggests that the such industry has a huge potential in Oman Tie up with mobile manufacturing company, wholesalers and retailers will able to take this business to another level Market reports are also highly positive projecting a huge growth rate of 30 to 40% in the year 2025. Any business in the beginning is expected to sustain losses, and this business is not an exception. The business would take a period of around 3 years to capture the estimated market share with expected increased number of mobile phone users. This would enable the company to reverse its losses and turn into a profit producing business within such period. The partners are of the view that venturing into mobile accessory industry will yield huge profits and will help to develop its existing business. Business proposal showed that in order to establish such manufacturing business it has to invest OMR 65 million. Such amount would be required in a period of 3 years. OMR 40 million in the initial stage and the remaining amount in the coming years. The investment comprises of investment in buildings, modern machines, materials and technology. The partners decided not to open up such manufacturing unit under its existing business and decided to set up a separate public limited company. Discussions with R&M consultants made the owners comprehend the processes to be pursued in order to start a public limited company i.e., SAOG. Omani Commercial Companies law specifies the details of the procedures to be ensued and rules to be followed for the setting up a public limited company. All the partners were considered to be promoters through and through the process of formation of company as S.A.O.G. Thus, the founder members of Mahri LLC followed rules governed by the Commercial Companies law and commercial registered law in formation of S.A.O.G. The initial process was completed by 19 August 2019. Mahri S.A.O.G entrusted with a Board of directors consisted of five promoters as minimum to decide the matters accordingly as per the provisions of the commercial company law. The company had to qualify for its minimum capital requirement through an Initial Public Offering. In order to raise the initial capital amount, based on the information given above, the promoters decided to take a loan of OMR 5 million from Bank Muscat. The company was to be registered with capital of OMR 40 million divided into shares of 400 baiza each of which 40% of the share capital was contributed by the promoters and for 40% of the share capital was decided to be raised through an initial public offer. The type of shares offered for subscription consist only of ordinary shares. Each single Share carries the right to one vote at any general meeting. Offer price for each share is at a premium of 10% along with additional share issue expense of 2 baiza per offer share. Purpose of the IPO is to comply with the obligations stipulated in the Oman commercial law with regards to company formation Persons eligible for Offer Shares can be Omani and non-Omani individuals and juristic persons who apply a minimum of 10,000 Offer Shares and in multiples of 100 Shares. Persons prohibited from subscribing to the offer are the following: Sole proprietorship establishments: The owners of sole proprietorship establishments may only submit Applications in their personal names. Trust accounts: Customers registered under trust accounts may only submit Applications in their personal names Multiple Applications: An Applicant may not submit more than one Application Joint Applications: Applicants may not submit applications in the name of more than one individual (including on behalf of legal heirs). All such Applications will be rejected without contacting the Applicant Proposed allocation procedure: In case of oversubscription, for the purpose of allocating the Offer Shares between the eligible investor groups, the allocation of the Offer Shares will be 1:4. The maximum limit of shares allotted to an individual cannot be more than 100,000 shares. Offer opening and closing Date was 3 September 2019 - 12 September 2019. Oman Arab Bank SAOG was appointed as the issue manager and the all nationalized Omani Bank were to be the collection banks. Collection Brokers consisted of PS Capital Markets S.A.O.C.; RAK Capital S.A.O.C.: KP LLC and the reporting accountants are PWC. The company's issue was oversubscribed by 4.5 times of which 0.5 times were prohibited investors whose application was rejected. Of all the qualified investors' allotment was made pro-rata. Excess amounts were refunded within 3 days You are required to analyse the given situation and detail out the following: a. Considering the scenario given do you think that the partners decision was appropriate to set up a Mahri S.A.O.G for its mobile accessory business or was possible for the partners to set up the mobile accessory business under Mahir LLC? Also enumerate the various factors in your own words that motivated the partners to venture into mobile accessory business. (3 marks - Min 150 words) b. List out the concerned parties involved in the IPO. Also identify the number of shares that would able the company to qualify with minimum subscription criteria. Apart from the information given above are there any other requirement which the company must comply with while raising capital through such IPO? (3marks - Min 150 words) c. Calculate the issue price, total number of share applications received, total number of shares rejected, total number of shares allotted and share capital structure of Mahri S.A.O.G. after the IPO. Show necessary calculations (4 marks) Case Study 1: Mahri LLC's famous for hotel and office accessories supplies and are spread over in many important cities of Middle Eastern countries. They have 45 branches providing wide range of accessory items mostly in hotel industry. Over a period of time they even included gym equipment to their product list. Such a huge growth happened within 7 years of its commencement. Along with it they also have a dedicated website named Mahri LLC bookings for all kinds of bookings including flight, hotels and many other. Both the businesses are producing good profits. Huge customer base and support encouraged the partners to try their part in mobile accessories industry producing headsets, phone guards and covers using radiation control materials. The owners of the company know many mobile phone accessory producers are already producing such products and selling in the market. Despite all these, the owners believe that they have a better understanding of the customers' requirements which gives immense confidence to the owners to foray into the business. Feasibility report indicated a huge positive and optimistic growth for the industry. The feasibility study revealed that nearly 150 to 200 new direct and indirect jobs can be created within a quick period of time of its establishment. Market report suggests that the such industry has a huge potential in Oman Tie up with mobile manufacturing company, wholesalers and retailers will able to take this business to another level Market reports are also highly positive projecting a huge growth rate of 30 to 40% in the year 2025. Any business in the beginning is expected to sustain losses, and this business is not an exception. The business would take a period of around 3 years to capture the estimated market share with expected increased number of mobile phone users. This would enable the company to reverse its losses and turn into a profit producing business within such period. The partners are of the view that venturing into mobile accessory industry will yield huge profits and will help to develop its existing business. Business proposal showed that in order to establish such manufacturing business it has to invest OMR 65 million. Such amount would be required in a period of 3 years. OMR 40 million in the initial stage and the remaining amount in the coming years. The investment comprises of investment in buildings, modern machines, materials and technology. The partners decided not to open up such manufacturing unit under its existing business and decided to set up a separate public limited company. Discussions with R&M consultants made the owners comprehend the processes to be pursued in order to start a public limited company i.e., SAOG. Omani Commercial Companies law specifies the details of the procedures to be ensued and rules to be followed for the setting up a public limited company. All the partners were considered to be promoters through and through the process of formation of company as S.A.O.G. Thus, the founder members of Mahri LLC followed rules governed by the Commercial Companies law and commercial registered law in formation of S.A.O.G. The initial process was completed by 19 August 2019. Mahri S.A.O.G entrusted with a Board of directors consisted of five promoters as minimum to decide the matters accordingly as per the provisions of the commercial company law. The company had to qualify for its minimum capital requirement through an Initial Public Offering. In order to raise the initial capital amount, based on the information given above, the promoters decided to take a loan of OMR 5 million from Bank Muscat. The company was to be registered with capital of OMR 40 million divided into shares of 400 baiza each of which 40% of the share capital was contributed by the promoters and for 40% of the share capital was decided to be raised through an initial public offer. The type of shares offered for subscription consist only of ordinary shares. Each single Share carries the right to one vote at any general meeting. Offer price for each share is at a premium of 10% along with additional share issue expense of 2 baiza per offer share. Purpose of the IPO is to comply with the obligations stipulated in the Oman commercial law with regards to company formation Persons eligible for Offer Shares can be Omani and non-Omani individuals and juristic persons who apply a minimum of 10,000 Offer Shares and in multiples of 100 Shares. Persons prohibited from subscribing to the offer are the following: Sole proprietorship establishments: The owners of sole proprietorship establishments may only submit Applications in their personal names. Trust accounts: Customers registered under trust accounts may only submit Applications in their personal names Multiple Applications: An Applicant may not submit more than one Application Joint Applications: Applicants may not submit applications in the name of more than one individual (including on behalf of legal heirs). All such Applications will be rejected without contacting the Applicant Proposed allocation procedure: In case of oversubscription, for the purpose of allocating the Offer Shares between the eligible investor groups, the allocation of the Offer Shares will be 1:4. The maximum limit of shares allotted to an individual cannot be more than 100,000 shares. Offer opening and closing Date was 3 September 2019 - 12 September 2019. Oman Arab Bank SAOG was appointed as the issue manager and the all nationalized Omani Bank were to be the collection banks. Collection Brokers consisted of PS Capital Markets S.A.O.C.; RAK Capital S.A.O.C.: KP LLC and the reporting accountants are PWC. The company's issue was oversubscribed by 4.5 times of which 0.5 times were prohibited investors whose application was rejected. Of all the qualified investors' allotment was made pro-rata. Excess amounts were refunded within 3 days You are required to analyse the given situation and detail out the following: a. Considering the scenario given do you think that the partners decision was appropriate to set up a Mahri S.A.O.G for its mobile accessory business or was possible for the partners to set up the mobile accessory business under Mahir LLC? Also enumerate the various factors in your own words that motivated the partners to venture into mobile accessory business. (3 marks - Min 150 words) b. List out the concerned parties involved in the IPO. Also identify the number of shares that would able the company to qualify with minimum subscription criteria. Apart from the information given above are there any other requirement which the company must comply with while raising capital through such IPO? (3marks - Min 150 words) c. Calculate the issue price, total number of share applications received, total number of shares rejected, total number of shares allotted and share capital structure of Mahri S.A.O.G. after the IPO. Show necessary calculations (4 marks)