x Abu Dhabi, UAEFriday 19 January 2018

Share rights for Dubai Group sold

Dubai Group pulls out of participating in a $241m rights issue at BankMuscat.

Dubai Group has sold its rights to participate in a share sale at BankMuscat worth 96.7 million Omani rials (Dh922.6m).

The move comes as the effects of the UAE company's US$10 billion (Dh36.73bn) restructuring sap its ability to invest in its holdings.

The investment vehicle, which is owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, is the second-largest shareholder in BankMuscat, with a 14.7 per cent shareholding.

BankMuscat, Oman's biggest lender, had sought to raise the funds in a rights issue to help meet regulatory requirements and develop an Islamic bank.

But sources familiar with the matter said Dubai Group had sold its rights to participate in the share sale, which granted it the opportunity to buy 33.3 million shares in BankMuscat.

These rights can be traded during the subscription period under the terms of the share sale.

BankMuscat's shares rose 2.2 per cent yesterday to 511 baisas each.

Dubai Group and BankMuscat both declined to comment.

The bank's biggest shareholder is the Oman Royal Court Affairs, an investment vehicle owned by Oman's ruler Sultan Qaboos bin Said, which has a 28.4 per cent stake in the bank.

In 2007, Dubai Group paid Dh2.2bn for its stake in BankMuscat. Its other major stakes - built up during the past decade - include the bailed-out lender Cyprus Popular Bank, Egypt's EFG Hermes and Global Investment House.

As a result of its heavy debt burden, the company was finding itself unable to invest in its holdings, said Khalid Howladar, a senior credit officer at Moody's Investors Service.

"Dubai Group pulling out of BankMuscat's rights issue isn't a surprise, given that Dubai Group is currently engaging in restructuring discussions with creditors," he said.

In a note earlier this month, Qatar National Bank said it expected the rights issue, which closes on July 23, would dilute both earnings per share and dividends per share.