Qatar’s fifth-largest bank by market value is considering selling shares in London as part of a plan to boost capital by up to $1.6 billion in 2013, four banking sources said in a report published by Reuters.
Speaking on condition of anonymity to Reuters news agency, two of the sources said that Doha Bank, part-owned by the Qatar’s sovereign wealth fund, may raise about a quarter of the capital through an issue of global depository receipts (GDR) on the London Stock Exchange, with the remainder raised through a local rights issue.
A GDR is a certificate that represents a block of shares in a company. GDRs are often issued by firms in emerging market states to allow foreign investors to buy the stock more easily.
Sources close to the Doha Bank said capital levels are lower than its Qatari peers and proceeds from the share issue are expected to be used mainly to help to plug that shortfall.
“The bank needs to boost capital and that’s the main reason for the rights issue,” one Gulf-based banking source said. “If they end up raising more than a billion dollars comfortably, some of it could be used for expansion purposes.”
Chief Executive R.Seetharaman declined to comment on specific details of the bank’s plan but said that it is ultimately up to shareholders to decide on the capital increase.
The lender said last month that it could increase its capital 50% by the first quarter of 2013 to help to finance its expansion plans. It has a market value of about $3.2 billion.