MUSCAT : Bank Nizwa has proposed a merger with Alizz Islamic Bank through an acquisition and incorporation transaction that would create a larger Islamic banking institution in Oman, while investment holding company Ominvest has agreed to become a strategic investor in the merged entity, according to separate disclosures issued to the Muscat Stock Exchange on Thursday.

Bank Nizwa said it had submitted a non-binding letter of intent to the board of directors of Oman Arab Bank, seeking to acquire 100% of the issued share capital of Alizz Islamic Bank SAOC and subsequently merge the bank into Bank Nizwa.

The proposed transaction values Alizz Islamic Bank at an indicative valuation of 1.2 times book value, according to Bank Nizwa’s disclosure.

The lender said the merger would be financed through a combination of equity and capital instruments, including the issuance of Additional Tier 1 (AT1) perpetual sukuk and a strategic equity investment by Oman International Development and Investment Company SAOG (Ominvest).

In a separate filing, Ominvest said its board of directors had approved participation as a strategic investor in the proposed funding structure at a meeting held on July 16.

The investment is expected to result in Ominvest holding a strategic stake of up to 20% of Bank Nizwa’s issued share capital following completion of the proposed merger through the subscription of new shares.

Neither Bank Nizwa nor Ominvest disclosed the financial size of the proposed investment, the value of the acquisition, or the amount expected to be raised through the planned sukuk issuance.

The proposed merger and the associated funding structure remain subject to regulatory approvals, shareholder approvals and other applicable consents.

Bank Nizwa said the transaction is expected to contribute significantly to the advancement of Oman’s Islamic banking sector, strengthening its role in supporting the Sultanate’s economy and sustainable growth objectives.

“The proposed merger is intended to be effected through the acquisition by Bank Nizwa of 100% of the issued share capital of Alizz Bank, followed by the merger by incorporation of Alizz Bank into Bank Nizwa,” the bank said in its disclosure.

Ominvest said it would continue to keep the market informed of any material developments in accordance with applicable disclosure requirements.

The proposed transaction represents one of the most significant developments in Oman’s Islamic banking sector in recent years and comes amid ongoing efforts by financial institutions in the Sultanate to strengthen capital bases, improve scale and enhance competitiveness.

If completed, the merger would combine Bank Nizwa, Oman’s first full-fledged Islamic bank, with Alizz Islamic Bank, creating a larger Sharia-compliant banking franchise, while bringing Ominvest in as a major strategic shareholder.

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