Abu Dhabi's FAB surges as it seeks to raise foreign ownership

The UAE's biggest lender aims to raise the cap to 40% from 25%
Abu Dhabi's FAB surges as it seeks to raise foreign ownership
First Abu Dhabi Bank's shares climbed as much as 5.8 percent to 15.6 dirhams at the open in Abu Dhabi, the biggest increase since April 2017.
By Bloomberg
Sun 03 Feb 2019 10:59 AM

First Abu Dhabi Bank jumped on optimism the lender will follow peers and raise the foreign-ownership limit in its stock.

The shares climbed as much as 5.8 percent to 15.6 dirhams at the open in Abu Dhabi, the biggest increase since April 2017.

The ADX General Index added 2.5 percent. The UAE's biggest lender aims to raise the cap to 40 percent from 25 percent, it said last week.

Shareholders still need to approve the change in a meeting on February 25. Investors from abroad held about 12 percent of FAB shares as of the end of last month, according to information on the stock exchange’s website.

Dubai-based Emirates NBD previously announced plans to quadruple the limit for foreigner to 40 percent.

The higher cap for foreigners could allow the Abu Dhabi-based lender to earn a higher representation within emerging markets benchmarks compiled by MSCI Inc. and FTSE Russell, triggering inflows of as much as $766 million, according to Mohamad Al Hajj, an equities strategist at the research arm of EFG-Hermes Holding Co. in Dubai.

Even if the percentage owned by foreigners doesn’t actually reach the expected new 40 percent limit, the change in the ceiling will still allow the re-balancing of weight in the benchmarks.

If the new cap is approved by the end of this month and is fully implemented before the last 10 business days of April, Al Hajj estimates $534 million of inflows in May and $232 million in June from MSCI and FTSE passive investors, respectively.

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