Kuwait's Mobile Telecom Co (Zain) said on Saturday it raised $4.49 billion in the Gulf's biggest capital hike this year, selling almost all offered shares despite tough markets with a near 50 percent discount.

The 1.2 billion dinar ($4.49 billion) capital hike was 99 percent covered, Kuwait's biggest mobile operator said in a statement. Around 1.42 billion shares were offered to shareholders at 850 fils each, about half of Thursday's close of 1.72 dinars, raising the total to 4.28 billion shares.

The share offer, Kuwait's biggest ever, coincided with a sharp fall in the local stock market, which like other Gulf markets has been hit by a U.S. financial crisis.

Zain said the subscription had gone better than expected considering the difficult market environment.

The outcome had been anxiously anticipated by analysts since Zain is the biggest Kuwaiti stock with a market capitalisation of around $27.5 billion, the company said.

A spokesman for Zain said the company had started counting all shares including the capital hike from the day after the last general assembly approving the move on March 10, giving a market value of $27.5 billion. Without the new shares the market value would have been around $18 billion.

Oversubscriptions are common in Kuwait as companies often offer shares at huge discounts to win shareholder loyalty but in Zain's case the issue had been open only to existing shareholders for a fixed amount of shares. 

Zain, which operates in 22 countries, has said it wants to use the money to fund expansion in the Middle East and Africa.

Zain has been spending billions of dollars to expand as it faces competition from Saudi Telecom 7010.SE, which is about to set up Kuwait's third mobile operator. In Saudi Arabia alone, Zain said it in June it planned to invest over $1.5 billion.

This has led to Zain's net income falling 3.6 percent in the second quarter, its first profit fall in a year.

Zain has forecast a more than 30 percent rise in net earnings in 2009 as some investments pay off. For 2008, it has forecast a net growth of 5 percent.

The operator, in which Kuwait's government is the biggest shareholder, spent $3.4 billion to buy Celtel in 2005 to enter sub-Saharan Africa.

Kuwait's bourse has fallen 11 percent since the start of September and 3.5 percent last week.

In addition to worries after the U.S. financial crisis, the Kuwaiti government has been blaming a flurry of capital increases soaking up liquidity for the fall of the bourse.

Among others, National Industries Holding Group, the country's biggest construction materials firm, is offering a capital increase to raise 264.9 million dinars. Shares are priced at 900 fils each -- below Thursday's closure of 940 fils.

Kuwait's Agility, the Gulf's biggest logistic provider, has said it wants to raise 120 million dinars in a 25 percent capital increase but given no date yet.

A spokesman for Zain said the company had been buying back its own shares in the past few weeks to support the market.

Source:Reuters