Doha Bank, Qatar’s fifth-largest lender by market value, plans to increase its capital by 50 per cent, with a quarter raised through a local rights issue and the remainder from a share sale in London.
Doha Bank’s capital levels are lower than its Qatari peers and proceeds from the share issue are expected to be used mainly to plug that shortfall.
Its board is seeking the approval of shareholders for the capital increase, the lender said in a bourse statement on Monday.
Doha Bank, part-owned by the Gulf state’s sovereign wealth fund, plans to increase capital by 25 per cent by issuing new shares to current shareholders at 30 riyals per share – a discount to its market price of 54 riyals.
It will raise the other quarter through an issue of global depository receipts (GDR) in the second phase of the capital increase plan, the bank said.
A GDR is a certificate that represents a block of shares in a company. GDRs are often issued by firms in emerging market states to allow foreign investors to buy the stock more easily.
In October, sources told Reuters that the bank was considering selling shares in London as part of a plan to boost capital by up to $1.6 billion in 2013.
Arqaam Capital analyst Jaap Meijer said at the time that Doha Bank’s capital base was “very tight”.
A rights issue with shares priced at a 30 per cent discount will help to raise about 4.1 billion riyals ($1.13 billion), Meijer had written in a research note, adding that the bank’s core Tier 1 capital ratio would fall to 9.6 per cent by the end of 2013 without a capital increase.
The Qatar Investment Authority (QIA), the state sovereign fund, owns a near-17 per cent stake in Doha Bank, according to the lender’s 2011 annual report.
Doha Bank shares were trading 1.3 per cent higher at 54.1 riyals on the Doha bourse at 0710 GMT.