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|21 August, 2018

ADIB shareholders approve $272mln rights issue

Bank will also issue a 2.75billion UAE dirham sukuk, with existing Islamic bond retired

Abu Dhabi Islamic Bank headquarters.

Abu Dhabi Islamic Bank headquarters.

Handout via Abu Dhabi Islamic Bank

Abu Dhabi Islamic Bank (ADIB) shareholders have approved a board proposal to raise up to 1 billion dirhams ($272 million) via a rights issue and for the bank to also issue a new 2.75 billion-dirham sukuk.

One billion dirhams of the new sukuk’s proceeds will be used to repay a previous sukuk issued six years ago, according to an ADIB statement.

The bank said a tradeable rights issue will involve issuing 464 million new shares to shareholders at 2.16 dirhams per share. That represents a 45 percent discount to ADIB’s share price when the plan was announced in late July. This rights issue will bring the bank’s total share capital to 3.63 billion shares.

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ADIB said it will continue focusing on growing its retail business "while capturing opportunities across corporate, transaction and correspondent banking".

Vice-chairman and acting CEO Khamis Buharoon said in the statement that by "voting in favour of ADIB’s proposed capital plans, our shareholders have clearly understood and endorsed the bank’s growth strategy". A timetable for the offer will be announced soon, it added.

In July, ADIB reported a second-quarter profit of 572.7 million dirhams, up 3.8 percent year-on-year. Revenue fell 3.1 percent to 1.36 billion dirhams.

ADIB's larger domestic rival, Dubai Islamic Bank, undertook its own 5.1 billion dirham rights issue in May, which was conducted to boost the bank's liquidity.

An infographic produced by Salaam Gateway shows that by the end of June, Islamic banks had a 20.6 percent share of total assets held by banks in the United Arab Emirates.

(Writing by Michael Fahy; Editing by Matt Smith)

(michael.fahy@thomsonreuters.com)

© ZAWYA 2018