Capital-raising plan may weigh on Arabtec

Shares in Dubai's builder Arabtec may come under fresh selling pressure after the firm sets a date for a rights issue that will be dilutive for shareholders.

Arabtec, part-owned by Abu Dhabi state fund Aabar Investments, said it will raise $650 million through a rights issue before the end of June to help fund expansion.

The fund-raising is part of a five-year expansion plan that could include a further capital increase of $650 million by the end of 2014 if needed, the company said.

Last month, the company had said it aimed to raise around $1.8 billion in total through a rights issue and convertible bond; it now looks as if $1.3 billion may ultimately be raised through rights issues, which is a larger proportion of the total than some investors had hoped.

"Staggering the rights issue on an 'if needed' condition is unproductive and the funding exercise should be done in one go with a clear plan so it can be evaluated properly by investors," says Anastasios Dalgiannakis, institutional trading manager at Mubasher.

Arabtec's shares have fallen more than 30 percent since the initial announcement of capital-raising and management changes on Feb. 27. The rights issue was planned at a near 50 percent discount to Arabtec's then stock price.

In Egypt, the court overturned on Wednesday a public prosecutor's decision to freeze the assets of 23 investors who are under investigation for alleged stock market manipulation.

This may help relieve some negative sentiment on Cairo's bourse.