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BankMuscat Board approves RO 238.3 mn
(USD 619 mn) Dubai Group proposal
to take 15% stake
Single largest financial services cross border
investment
in the region
Muscat/Dubai, 11 August, 2007: The Board of
Directors of BankMuscat (SAOG) has approved a
proposal to raise capital through private
placement of 15% of its shares with Dubai
Financial Group, a Dubai Group company, for a
total cost of RO 238.3mn (USD 619 mn). This is
the single largest cross border investment in
the banking sector in the region. Dubai Group is
a member of Dubai Holding.
This proposed transaction is subject to
necessary approvals from the regulatory
authorities and the shareholders of the Bank.
The shareholders will be invited to
Extraordinary General Meeting to discuss and
approve the proposed private placement. The deal
is expected to be completed before the end of
this year.
Speaking on the occasion, Sheikh AbdulMalik bin
Abdullah Al Khalili, Chairman, BankMuscat SAOG
said: “To lend further momentum to our ambitious
growth plans, BankMuscat has periodically looked
at innovative ways to raise capital. This time
is no exception. We have considered the various
options open to us and found the private
placement route to be the most suitable. We
found the offer from Dubai Financial Group to be
the most rewarding for stakeholders: not only in
terms of the premiums quoted, but also in terms
of synergies in cultural beliefs and the
importance of long-term value creation.
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Sheikh AbdulMalik bin Abdullah Al
Khalili, Chairman, BankMuscat. |
Soud
Ba’alawy,
Executive Chairman, Dubai Group. |
“Dubai today
is in many ways the torchbearer of the Middle
East in terms of the rapid strides it has taken
toward integration with the global economy. This
partnership will allow us to marry the
tradition, culture and strong economic roots of
Oman borne out of the visionary leadership of
His Majesty Sultan Qaboos bin Said, with the
business prowess of Dubai.”
Dubai Financial Group is the financial services
holding company for Dubai Group. Dubai Financial
Group’s strategy is to participate in global and
regional institutions for the long term and
focuses on aligning itself with the management
to create significant value for all
stakeholders.
Mohammed Al Gergawi, Executive Chairman, Dubai
Holding commented on the significance of the
deal: “We are very pleased with this investment
as it is an important step in cementing the
strategic economic partnership between UAE and
Oman. This comes at the right time as both the
Dubai and Oman economies diversify rapidly and
gain momentum in terms of growth and
opportunities.”
He added: "Since its inception, Dubai Holding
has worked to adopt initiatives and projects
that will contribute to and strengthen economic
relations between the United Arab Emirates and
all countries in the region, through
partnerships and strategic investments in
several sectors. This is the second investment
project for Dubai Holding in the Sultanate of
Oman. The beginning of our cooperation with the
Sultanate was through Sama Dubai, a member of
Dubai Holding that specializes in real estate
development, which in 2005 launched a multi-use
real estate project in the Yiti region. We are
currently examining the possibilities of future
investment projects in the Sultanate."
Commenting on their decision to invest in
BankMuscat, Soud Ba’alawy, Executive Chairman,
Dubai Group said: “Dubai Financial Group has
always believed in following a ‘value-added
approach’ to its investments. This includes
identifying companies where we believe have a
strong long-term growth potential and where we
can add substantial value as a partner.
“We believe BankMuscat is at an extremely
interesting point in its growth curve, with the
domestic Omani economy rapidly diversifying and
gaining momentum in terms of growth. We believe
in the strength of the management at BankMuscat
and will work with them to grow rapidly in the
region.”
The highlights of the private placement are as
follows:
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BankMuscat will issue 161.57mn ordinary equity
shares to Dubai Financial Group LLC through a
private placement as per Article 83 of the
Commercial Companies Law. This represents 15% of
the capital of BankMuscat post the private
placement
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The price of a BankMuscat share that would be
issued under the above private placement would
be RO 1.475 per share. The total consideration
for the private placement would be RO 238.3 mn (USD
619 mn)
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Dubai Financial Group would nominate two
directors into the Board of BankMuscat subject
to the regulations of the Commercial Companies
Law
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The private placement would be subject to the
parties entering into a subscription agreement
and to approval of the Central Bank of Oman,
Capital Market Authority and the shareholders of BankMuscat in an EGM
This private placement will result in a
substantial increase in the net worth of the
Bank. We intend to use these funds to support
the overall asset growth and expansion plans of
the Bank both in the domestic market and
overseas. The funds will also help us further
strengthen our capital adequacy position, which
will go up to 18.87%, from the current 11.4%
levels,” Sheikh AbdulMalik added.
The Central Bank of Oman currently requires
banks to maintain a capital adequacy ratio, the
ratio of a bank’s capital to its risk-weighted
credit exposure, to be no less than 10%.
BankMuscat has just announced a net profit of RO
40.2 mn (USD 104.4mn) for the half year ended
June 30, 2007, as against a net profit of RO
28.0 mn (USD 72.7mn) reported during the same
period in 2006, thus recording an impressive
growth of 43.6%. This is the second successive
quarter that the Bank has turned in a record
performance. The basic earnings per share on an
annualised basis, which works out to 88 baizas
for every 100 baiza share of the Bank.
Though subject to regulatory approvals, the
transaction is expected to be complete before
the end of 2007. |
