Doha Bank is preparing a deeply discounted share sale as part of a capital increase expected to raise US$850 million (Dh3.12 billion).
Shareholders approved an increase of 50 per cent in the bank’s capital, it said yesterday.
The deal is split between a sale of ordinary shares alongside a restricted sale of global depositary receipts (GDRs), bundles of multiple shares that are typically listed overseas to attract international capital. The bank has set the share premium at a 43.7 per cent discount to its current market value.
The deal addresses long-standing concerns around the bank’s capital levels, said Elena Sanchez-Cabezudo, a financial analyst at EFG Hermes.
Doha Bank has “a weaker capital position than the others”, she said. “They haven’t done any capital raising for some time and have a very high dividend payout ratio.”
The bank has struggled since 2008 to grow its lending, and it remains the most locally focused of Qatar’s lenders even after opening offices in Abu Dhabi and elsewhere, Ms Sanchez-Cabezudo added.
Doha Bank’s capital ratios lag the rest of the country’s financial sector, which is dominated by the state-controlled Qatar National Bank, which became the biggest lender in the Middle East last year.
But the deal has mystified some in the industry.
The GDRs are to be “held by a depository bank”, but the bank does not state that they will be listed on an overseas exchange.
Bankers speculated that one reason for this could be to minimise any requirements for public disclosure of the ultimate buyers of the securities.
R Seetharaman, Doha Bank’s chief executive, indicated last month that no final decision had been taken on the GDRs.
Doha Bank’s biggest shareholder is the Qatar Investment Authority, which owns a 16 per cent stake.