Shares of UAE lender ADCB fall as it looks to raise $1.7 billion through a rights issue

Abu Dhabi Commercial Bank's (ADCB's) shares fell as much as 7.9% on Monday after it announced that the bank was looking to raise as much as 6.1 billion dirhams (1,66 billion dollars) via a rights offering.

The board of the bank has recommended that it increase the share capital through the issuance of 592.2 millions new shares. This move, according to the lender, would speed up organic growth.

ADCB, third largest bank in United Arab Emirates by assets, aims to double its net profits to 20 billion dirhams over the next five-year period.

ADCB announced in a press release that the new shares would be sold at 10,3 dirhams each, which is a discount of 30% from Thursday's closing price, 14.76 dirhams. Stocks had increased by 41.7% from the start of the year.

ADCB shares were temporarily suspended on Monday, before being resumed and falling to as low as 13,6 dirhams. By 0936 GMT the stock had fallen 6.8%, and was moving towards the offer price.

In the UAE, there have been a number of secondary offerings in this year. ADNOC, for example, raised $2.84billion in February, in what was one of the largest share sales in the Middle East over the past few years.

Dubai's du announced on Monday a secondary stock sale that could raise up to $923m as one of the company's main investors reduces its stake.

ADCB is owned by Abu Dhabi Investment Council, a government-run entity that is part of the sovereign wealth fund Mubadala.

The total assets of the company stood at 719 milliards dirhams by June 30.

ADCB announced that shareholders will vote on a proposed capital increase on Wednesday, October 13. $1 = 3.6728 UAE Dirham (Reporting and editing by Kirby Donovan; Additional reporting by Shakeel Ahmed; Editing by Federico Maccioni)

(source: Reuters)