A subsidiary of Aabar Investments has received regulatory approval to buy a further 100 million shares in Arabtec, strengthening the Abu Dhabi state-run fund’s hold on the Dubai-listed builder, according to a bourse filing on Monday.
Aabar’s move to raise its shareholding follows a bitter struggle with former Arabtec chief executive Hasan Ismaik, a Jordanian businessman who took the helm in 2013 as he built up his own holding.
Should Aabar buy the permitted number of shares, its stake would rise to 37.27 per cent from 35.6 per cent at present, according to the Dubai Financial Market.
“This is a way to buy Arabtec shares when the share price goes below a certain amount,” said Mohammed Yasin, managing director of NBAD Securities.
“It appears a lot of parties have used Arabtec shares as collateral for loans. Suppose Arabtec’s shares go below a certain price, it could trigger a margin call and cause panic. Such an approval … would also be useful if Arabtec’s year-end or Q1 or Q2 results are not good.”
Aabar’s latest move would have appeared far-fetched in June, when bourse data showed the secretive fund had cut its holding to 18.94 per cent from 21.57 per cent over several days.
That revelation led to mass selling of one of the main Dubai bourse’s most liquid securities, dragging the market down with it. From a record high of Dhs7.4 in May, Arabtec’s shares ended Monday at Dhs2.87.
Ismaik quit as CEO in mid-June, soon after he had raised his Arabtec holding to 28.85 per cent from 8.03 per cent.
In November, he then sold 16 per cent of Arabtec to Aabar, which made a remarkable volte face by nearly doubling its holding to 34.93 per cent from 18.94 per cent.
But this time Ismaik is unlikely to be selling any of his remaining 11.8 per cent stake.
“He is not part of this,” a source close to Ismaik told Reuters.
Aabar must complete the approved share purchases by July 25, 2014, the statement added, although it is not obliged to buy any shares.
“Shareholders of Arabtec are unlikely to sell now unless they get a good price – at least Dhs4,” said Ziad Abbas, manager of domestic capital markets, National Bank of Abu Dhabi.
“Also, if Aabar wants to buy more shares of Arabtec, it means there is a good plan for the future, so shareholders may wait and not sell immediately.”