ADCB to raise $1.6 billion from rights issue to boost asset growth

Abu Dhabi Commercial Bank has approved a strategic rights issue to raise Dh6.1 billion ($1.66 billion) through the issuance of new shares to boost asset growth, with the offer receiving full support from its majority shareholder, Mubadala Investment Company.

The proposed rights issue will increase ADCB's share capital to more than Dh7.9 billion, from about Dh7.3 billion, with more than 592 million new shares issued, the lender said in a statement on Monday.

The new stock will be issued at a price of Dh10.3 per new share, representing a discount of 30 per cent to the closing price on September 4.

ADCB's shares closed down 7 per cent at Dh13.72 on Monday.

The initiative will "accelerate the pace of the bank's strong organic growth and deliver substantial long-term value for shareholders", the lender said. It will also help the bank remain "ahead of evolving regulatory requirements".

Mubadala "has confirmed its full support" for the initiative and "its commitment as an existing shareholder to subscribe in full for its proportional entitlement of the offered shares", the bank added.

The offers remains subject to obtaining all necessary regulatory and shareholder approvals.

ADCB reported an 11 per cent increase in net profit in the second quarter to Dh2.5 billion, driven by non-interest income that jumped by 44 per cent during the period. Net interest income also rose 12 per cent annually in the second quarter, with higher volumes partially offsetting the impact of three interest rate cuts since September, the bank said.

Total assets grew by 17 per cent year-on-year to reach Dh718.5 billion at the end of June.

Over the past 12 months, the bank said it delivered a total shareholder return exceeding 75 per cent. As per its guidance, it aims to distribute dividends of Dh25 billion over the next five years – a 50 per cent increase over the previous five-year period.

"The rights issue will build on this momentum as the bank advances its ambitious strategy to double net profit to Dh20 billion within five years, while delivering an annual return on equity above 15 per cent each year," the lender said.

Capital markets in the UAE are recording robust activity amid continued economic momentum. ADCB joins a growing list of companies that have tapped the equity markets for additional funds through secondary shares sales and rights issues.

Last month, Adnoc raised $317 million by offering 222 million shares in Adnoc Logistics and Services through an institutional share sale. The move was aimed at improving liquidity, diversifying the shareholder base and supporting the case for Adnoc L&S's inclusion in the MSCI Emerging Market Index.

Last week, UAE artificial intelligence company G42 raised $100 million from the sale of a 2 per cent stake in Abu Dhabi-listed data analytics business Presight AI to institutional investors.

On Monday, du investor Mamoura Diversified Global Holding, a unit of Mubadala Investment Company, also announced plans to sell 342 million shares, representing 7.55 per cent of du’s share capital, in a secondary share sale. The offer could raise up to Dh3.39 billion.

ADCB said it would announce the full terms and timetable for the rights issue, including the ex-rights date and subscription period, after approval from the Central Bank of the UAE, the Securities and Commodities Authority and shareholders.

The General Assembly meeting for shareholders to vote on the proposed rights issue will be held on October 13.