Dubai takes stake in BankMuscat

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Sheikh AbdulMalik: the deal creates synergies in terms of cultural beliefs and long-term value creation.

Dubai Group, a member of Dubai Holding, is to take a 15% stake in Oman's BankMuscat, in what is the single largest financial services cross-border investment in the Gulf region.

The board of directors has approved the US$619m investment, which is subject to approval by regulators and shareholders. The shareholders will be invited to discuss and approve the proposed private placement at an extraordinary general meeting (EGM). The deal should be concluded by the end of this year.

Speaking on the occasion, Sheikh AbdulMalik bin Abdullah Al Khalili, chairman, BankMuscat, said: "To lend further momentum to our ambitious growth plans, BankMuscat has periodically looked at innovative ways to raise capital. This time is no exception. We have considered the various options open to us and found the private placement route to be the most suitable.

"We found the offer from Dubai Financial Group to be the most rewarding for stakeholders: not only in terms of the premiums quoted, but also in terms of synergies in cultural beliefs and the importance of long-term value creation."

He added: "This partnership will allow us to marry the tradition, culture and strong economic roots of Oman borne out of the visionary leadership of His Majesty Sultan Qaboos bin Said, with the business prowess of Dubai."

Mohammed Al Gergawi, executive chairman, Dubai Holding commented on the significance of the deal: "We are very pleased with this investment as it is an important step in cementing the strategic economic partnership between UAE and Oman. This comes at the right time as both the Dubai and Oman economies diversify rapidly and gain momentum in terms of growth and opportunities."

BankMuscat will issue 161.57m ordinary equity shares to Dubai Financial Group LLC through a private placement as per Article 83 of the Commercial Companies Law.

Following completion of the deal, Dubai Holding will nominate two members of BankMuscat's board. The bank's capital adequacy ratio will increase to 18.87%, from 11.4%.

This is the second investment project for Dubai Holding in the Sultanate of Oman, following Sama Dubai, a member of Dubai Holding that specialises in real estate development, which in 2005 launched a multi-use real estate project in the Yiti region.

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