Ministry reins in DIB

24 March 2006
The Economy & Planning Ministry has asked Dubai Islamic Bank (DIB) to postpone its plans to increase its capital through a rights issue. The move follows the ministry's decision to regulate the timing of initial public offerings (IPOs) and capital increases in response to a drop in local stock exchanges. The Dubai Financial Market (DFM) lost 11 per cent of its value on 14 March and overall the federations forces were down by about 20 per cent since the beginning of the year.

In a letter to the bank, the ministry requested the delay in 'consideration of the present situation of the markets licensed to operate in the UAE and since we are keen to see [a] sound and strong base for a prosperous economy'. The ministry has yet to approve a new date for DIB's capital increase.

'The ministry is looking at giving companies a timetable,' says DFM director-general Essa Kazim. 'This will relieve pressure on the market. The same liquidity goes to capital increases, IPOs and even the private joint stock companies, which are as big as IPOs.' The IPO of shares in home finance company Tamweel and the UAE's second mobile operator du both closed in March, together raising almost AED 700,000 million ($190,595 million).

The du IPO closed on 13 March 167 times oversubscribed at AED 400,000 million ($108,911 million). More than 225,000 investors applied for shares in the IPO of 20 per cent of the company, which was only open to UAE nationals. The shares will list on the DFM in mid-April.

The Tamweel subscription closed on 8 March, also heavily oversubscribed (MEED 17:3:06).

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