Doha Bank QSC (DHBK), Qatar’s fourth- biggest by assets, may raise as much as 5.81 billion riyals ($1.6 billion) from selling shares as it seeks to boost lending and expand in foreign markets.
Doha Bank will raise the money in the first quarter of 2013 and needs shareholder approval for the 50 percent capital increase, the lender said. Details of the plan will be announced later, the bank said today in a statement to the Qatari bourse.
The capital increase will help the bank participate in the country’s “major infrastructure” projects and expand overseas, including opening a branch in Abu Dhabi in the next two months, Chief Executive Officer Raghavan Seetharaman told reporters in Doha today. The increase will also help the bank meet capital requirements under the new Basel III rules, he said.
Bank lending in the Persian Gulf country, the world’s biggest exporter of liquefied natural gas, surged 38 percent in the 12 months through July as banks helped fund $130 billion of planned spending on building projects ahead of the 2022 soccer World Cup. Qatari banks are also expanding overseas to beat limited growth prospects in a country of 1.7 million people.
Doha Bank shares rose 0.4 percent to 56.2 riyals in the Qatari capital today, valuing the bank at 11.6 billion riyals.
Doha Bank may raise 5.81 billion riyals if it raises half its current market value at no discount, and 4.1 billion riyals if it sells shares at a 30 percent discount, according to Jaap Meijer, a director for equity research at Dubai-based Arqaam Capital Ltd., who has a hold rating on the stock.
The fundraising will boost Doha Bank’s core tier-1 equity to 19.2 percent at the end of 2013 if it raises money at the current market price from 9.6 percent now, he said. Tier-1 equity will rise to 16.8 percent with a discounted sale.
The bank’s capital “is very tight and some of the money will go to plug that capital deficit and a part of it will be for mergers and acquisitions,” Meijer said by phone today.
Qatar National Bank SAQ (QNBK), the Persian Gulf country’s biggest bank by assets, raised $3.5 billion from a rights issue last year. Qatar National Bank increased its stake in Dubai based- Commercial Bank International PSC (CBI) to 39.9 percent from 16.5 percent in August in a deal that may be worth about $75 million and also received approval from Egypt’s central bank to start due diligence on French bank Societe Generale SA’s local unit this month ahead of a potential acquisition.
Doha Bank in July reported a 5.4 percent rise in first-half profit to 740 million riyals. The bank had total equity of 6.95 billion riyals at the end of June, according to data compiled by Bloomberg. In March, the lender raised $500 million from the sale of five-year Islamic bonds at a coupon of 3.5 percent.
Doha Bank expects its assets to expand between 15 percent and 20 percent a year over the next five years, Seetharaman said in October. It had assets of 51.8 billion riyals in June.
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