#AbuDhabi Commercial Bank Seeks $1.7 Billion Via Rights Issue - Bloomberg

Abu Dhabi Commercial Bank Seeks $1.7 Billion Via Rights Issue - Bloomberg

State-backed Abu Dhabi Commercial Bank PJSC said it will proceed with a 6.1 billion dirham ($1.7 billion) rights issue after it gains the approval of its shareholders, a rare such offering by an Emirati lender.

The emirate’s second largest lender by assets plans to offer 592.2 million shares at 10.3 dirhams apiece, a 30% discount to its closing price on Sept. 4, according to a statement on Monday. ADCB shares slipped as much as 7.9% to 13.6 dirhams apiece following the news, the lowest level since April 7, before recovering to 13.8 dirhams apiece.

Abu Dhabi sovereign wealth fund Mubadala Investment Company is the bank’s largest shareholder, with a stake of just under 61%, according to the bank’s website. Mubadala said it supported the move and would fully subscribe to its entitlement.

“ADCB’s capital increase via right issues of 6.1 billion dirhams should support the lender’s strong growth trajectory (13% on average by 2029), aided by the UAE’s growing project pipeline, possible M&A to help scale up operations and meet a 50-bp higher capital requirement next year without compromising dividends,” Bloomberg Intelligence analyst Edmond Christou wrote in a note.

Such transactions are relatively rare among Emirati lenders. United Arab Bank completed a $280 million rights issue in March, while Emirates NBD also had a rights issue in 2019.

A rights offering gives existing investors a chance to purchase additional stock in proportion to their current holdings.

ADCB’s board approved the transaction on Monday and will seek shareholder approval on Oct. 13.

ADCB in recent years had to cope with the fallout of a number of high-profile corporate restructurings in the country. For example, it held almost $1 billion in exposure to hospital operator NMC and was also a creditor to Arabtec, the builder that collapsed in late 2020. In subsequent years, the bank sought to repair its balance sheet by selling large non-performing loan portfolios.