x Abu Dhabi, UAEWednesday 24 January 2018

Mystery surrounds 4% Ajman Bank purchase

Large block trades in Ajman Bank shares set markets speculating about what could be happening behind the scenes, prompting calls for greater disclosure from the Islamic lender.

Ajman Bank shares have been bought by a mystery investor. Delores Johnson / The National
Ajman Bank shares have been bought by a mystery investor. Delores Johnson / The National

An unknown investor has bought almost 4 per cent of Ajman Bank, an indicator of further activity for the Islamic lender already regarded as a potential takeover target.

Shares were higher after a huge block of the company's stock traded hands on the market open, without any explanation from the company.

The Islamic institution's shares were up as much as 2.6 per cent to Dh1.58 each before sliding to Dh1.56 per share, after a block of 38.8 million shares were traded yesterday morning.

A bank spokeswoman did not respond to requests for comment on the share movement, which represents 3.8 per cent of Ajman Bank's share capital.

Tariq Qaqish, the head of asset management at Al Mal Capital, said investors required more transparency and disclosure from the company.

"The block trades indicate that there's something happening behind the scenes," he said. "But investors don't have enough disclosure to say what."

Last year Ajman Bank was frequently at the centre of rumours that it was the takeover target of an unnamed institutional investor, one factor which resulted in its shares rising by 71.2 per cent last year.

"There were rumours when the stock was around 80 fils per share that a group of Abu Dhabi investors were increasing their share in the bank, which led to a huge rally in the stock," Mr Qaqish added.

Ajman Bank said in November that it wished to dismiss speculation that it was seeking investment and "does not require a financial partner to oversee its strategic plan".

Since that time, several large block trades have taken place, the biggest occurring on February 17, when 88 million shares changed hands.

Ajman Bank is 25 per cent owned by the emirate's government.

The volume of Ajman Bank shares traded represented one in every six trades on the Dubai Financial Market (DFM) yesterday. The DFM General Index fell 0.2 per cent to 1,875.07.

Large block trades in local shares without accompanying public disclosure are common on the UAE's markets, and frequently generate controversy.

During a three-day period in September, shares representing a 23.4 per cent stake in Commercial Bank International traded hands, with no disclosure to existing shareholders until several days later. The buyer was later revealed to be Qatar National Bank, which ultimately accumulated a 40 per cent holding.

During January and February last year, shares in Arabtec Holding rocketed as much as 128.3 per cent - singlehandedly propelling the DFM Index into a bull market - as rumours circulated around trading desks that an investor was building a large position in the firm.

It was later revealed that Abu Dhabi's Aabar Investments had accumulated a 21.5 per cent stake.