Abu Dhabi’s FAB rises as it seeks to lure more foreign investors

The United Arab Emirates’ biggest lender aims to raise the cap for foreign ownership to 40% from 25%, it said last week. (Bloomberg pic)

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

The shares climbed as much as 5.8% in Abu Dhabi before paring gains to 1.8%. The ADX General Index added 0.6%, with FAB shares adding the most to the increase. The United Arab Emirates’ biggest lender aims to raise the cap for foreign ownership to 40% from 25%, it said last week.

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

Qatar National Bank last year raised the ceiling for foreigners to 49% from 25%, while Dubai-based Emirates NBD PJSC plans to quadruple the limit for foreigners to 20%.

Expected inflows
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 US$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% 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 US$534 million of inflows in May and US$232 million in June from MSCI and FTSE passive investors, respectively.