The company, which is 21 per cent owned by the Abu Dhabi investment fund Aabar, invited shareholders to buy the additional shares in the company at 27 branches of National Bank of Abu Dhabi and 17 branches of Abu Dhabi Commercial Bank across the UAE until June 23.
The news came after Arabtec, which at the beginning of the week had to deal with a strike by some workers, received final regulatory approval from the Securities and Commodities Authority to go ahead with the capital raising, which was ratified by shareholders in April.
Shares in Arabtec fell slightly in early day trading before rallying to finish the day 1.69 per cent up at Dh2.41 each.
The move is part of a wider five- year capital raising for the construction company which plans to raise up to Dh4.7bn and use the cash to aggressively grow its oil and gas and affordable housing operations.
A second rights issue for a further Dh2.4 billion if necessary has been planned for early next year. And the company is also considering a Dh1.6bn non-convertible bond issue which could take place if needed over the coming year.
Market commentators said that the rights issue was yet another sign that Arabtec was increasing its dominance over the UAE construction market.
"This capital raising was no surprise in the market and has already been priced in," said Sebastien Henin, frontier markets portfolio manager at The National Investor.
"The profile of Arabtec has completely changed over the past couple of years. It is no longer a Dubai company. It is now an Abu Dhabi-owned company and it has the balance sheet to back that up."
The UAE has overtaken Saudi Arabia as the biggest construction market in the Middle East for the first time since 2008 with US$16.2bn of contracts awarded last year, according to a report from Deloitte this month. Total spending on construction contracts was 4 per cent higher last year than the Saudi total, which reached $15.6bn - the first time in the past four years that the country has not topped the ranking.
Arabtec's key UAE projects include The Louvre Abu Dhabi and the Midfield Terminal in Abu Dhabi and the latest Dubai airport expansion.
Last week shares in the Nasdaq Dubai-quoted contractor Depa were suspended after Arabtec's chief executive Hasan Abdullah Ismaik and the Arabtec board members, Mohammed Al Fahim and Wassul Fakhoury were appointed to the Depa board. Last year Arabtec bought a 24 per cent stake in Depa.
Earlier this week Arabtec successfully settled a two-day strike among some of its construction workers who had been demanding that their Dh350 a month food allowance be paid with their salaries rather than to cover three daily meals provided by the company.
The company, which has a workforce of 40,000 said on Tuesday that all workers had returned to work with "no impact on any of its projects".