x Abu Dhabi, UAEWednesday 26 July 2017

Tamweel seeks approval to resume trading its shares

The Islamic mortgage company Tamweel says it applied to regulators to resume trading in its shares after a more than two-year freeze.

Tamweel had its shares suspended in 2008. Jaime Puebla / The National
Tamweel had its shares suspended in 2008. Jaime Puebla / The National

Tamweel, one of the UAE's largest Islamic mortgage companies, has applied to regulators for a resumption of trading in its shares.

The company, listed in Dubai, had its shares suspended in late 2008 when talks began over a merger with its larger competitor, Amlak Finance. But the planned merger failed to materialise and Dubai Islamic Bank (DIB) took full control of the company last year.

Brokers said a rush of trading was likely to follow the reactivation of the company's shares. Hundreds if not thousands of trades have taken place on the grey market since the freeze, they said, all of which would be officially executed when the stock trades again.

Since the stock was suspended in November 2008, the Dubai market has lost more than 16 per cent of its value.

Jalal Faruki, the managing director of brokerage at Al Mal Securities in Dubai, said while his company did not get involved in such grey-market transactions, he did expect a flood of selling that could put downward pressure on the shares.

"I think you're going to have people selling but I don't have any idea on pricing," Mr Faruki said.

Tamweel's stock last traded at just under Dh1 a share in November 2008, but DIB valued them at above Dh2 each in recent financial statements for last year.

Mr Faruki said DIB could step in as a ready buyer to stabilise the share price should the stock decline on the resumption of trading.

Tamweel did not say when its shares would be unfrozen, only that it had "made an application" to the Emirates Securities and Commodities Authority, the national markets regulator, "for resumption of trading in the company's shares".

Varun Sood, the acting chief executive of Tamweel, could not be reached for comment.

Tamweel restarted its mortgage business this year after its acquisition by DIB. As part of the takeover, DIB agreed to inject money into the company so it could resume home financing. Tamweel now offers some of the most competitive financing rates in the UAE.

Mahin Dissanayake, an associate director at Fitch Ratings, said the DIB takeover had resolved liquidity and funding issues, but had not addressed the underlying problem of its exposure to Dubai's embattled property market.

Fitch upgraded Tamweel's credit ratings this month, citing the removal of uncertainty over its ownership and business model. "Liquidity and funding issues have been resolved, but the fact is the loan book is full of real estate assets and … asset quality is the main concern."

Tamweel posted profits for last year of Dh26 million (US$7m), reversing a loss the year before.