x Abu Dhabi, UAEThursday 18 January 2018

Finance House offers shares to foreigners

Finance House has opened its shares to foreigners in a move to improve liquidity of trading.

A common concern among international investors is the limits on foreign ownership in GCC equities, which has led to the lack of liquidity in regional markets.

So it bodes well for trading in Finance House that the company has decided to offer 20 per cent of its shares to foreign owners.

The company, which provides personal, commercial and retail financing, yesterday won regulatory approval from the Emirates Securities and Commodities Authority to open up its shares to foreigners. It is listed on the Abu Dhabi Securities Exchange.

Under the previous structure, only UAE nationals had the right to trade the shares and that limitation showed in its trading.

On the only day it traded this week, just 513 shares changed hands, closing at Dh3.6.

The latest step was in response to "repeated requests by investors over the years", said Mohammed Wassim Khayata, the company's group chief operating officer.

"This opportunity will allow Finance House to widen its reach in the market … across the region and internationally," he said, adding he was "confident" the company would attract foreign shareholders.

Finance House posted a net profit of Dh115.1 million for last year. This year, its shareholders approved a dividend of 15 per cent.

Earlier, the company's insurance unit, Insurance House, raised Dh66m when it sold 55 per cent of its shares to the public but it barely met the capital requirements to list. Those shares were open only to UAE nationals and required a minimum subscription of 25,000 shares per investor.

As it stands, non-Gulf foreigners make up 3.31 per cent of ownership on UAE markets, or Dh12.4 billion, while UAE nationals hold 91.5 per cent of equities, according to a research report by Al Ramz Securities. The remainder is held by other Gulf nationals

Lifting foreign ownership limits has also been cited as a crucial element in the UAE's bid to be upgraded from a "frontier" market to the more prominent "emerging market" status.