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Big Success for Abu Dhabi Securities Exchange Rights Issue Implementation
Nov 30, 2014
Abu Dhabi Securities Exchange (ADX) announced the success of Eshraq Properties Rights Issues for existing shareholders which was listed on November 2nd, the start date of the trading period of rights issue, and ran until November 13, the end date of the trading period of rights issue. Eshraq Properties Rights Issue was approved by the shareholders in the Company’s extraordinary general meeting (EGM) on September 25th 2014.  Rights Issue was adopted by ADX for the first time following the issuance of UAE Securities and Commodities Authority (SCA) regulation for trading in rights issues on the country’s financial markets earlier last year. 

During the listing period, which commenced on the 2nd of November and closed on the 13th of November, a number of 4,609 trades on the rights were conducted at ADX with a trading volume of 838,361,136 shares and a total trading value of almost AED 100 million.   A total of 943 Eshraq shareholders partook in the subscription over the capital increase of 600 million shares. 

ADX also announced that the capital increase subscription was successful and was covered by 137%. The amount collected reached AED 819 million and the date of allotment and refund has been set to Sunday, November 30. Rights Issue allows a shareholder who does not want to or cannot subscribe for the share increase to sell his rights for financial benefit. 

The start date for subscription to the capital increase shares on ADX, for Eshraq Properties Rights Issues, began Sunday, November 9, 2014 and closed on Thursday, November 20, 2014. The company previously announced a capital increase by AED 600 million distributed on 600 million shares at par value AED 1 per share. The National Bank of Abu Dhabi (NBAD) acted as the receiving bank for the subscription. ADX established an e-link of the shareholders database with NBAD’s system which resulted in facilitating the subscription process and accelerating the allocation procedures to less than 5 business days.

The adoption of Rights Issue by ADX comes in line with its strategic objectives of diversification of financial products and the introduction of new investment tools. A Rights Issue is considered an invitation to existing shareholders to purchase additional shares in the company at a par value price, and sometimes comes with additional premium price. Companies use Rights Issues to raise capital. In certain cases, companies will have its Rights Issue underwritten by an investment bank for reassurance that it will raise the finances.

Speaking of Rights Issues, Mr. Rashed Al Balooshi, Chief Executive of ADX, said:” The success of this initiative will carry an enhanced value for ADX stakeholders and allow other listed companies to follow in order to consummate opportunities in an expedient manner, while also allowing them to retain the option to position their selves for successful liquidity events in the future.” 

“Rights Issue is a great addition to the markets and will further boost trading, thus increasing investment flows and institutional participation.  It will also help increase liquidity and provide shareholders of public joint stock companies the opportunity to achieve returns on their rights issue without participating in it.” ADX Chief Executive added.  

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