Mubadala to increase share in Aldar via Dh3.5bn convertible bonds


Aldar Properties on Thursday said it would issue Dh3.5 billion in convertible bonds to Mubadala Development Company to help it increase its shareholding in Aldar.

Aldar’s directors approved the issue of the bonds, which will be interest-free and mature within three years, the company said in a statement to the Abu Dhabi Securities Market on Thursday.

“The board approved the issuance of convertible bonds in an amount of Dh3.562bn to Mubadala and resolved the conversion price shall be equal to the average trading price of the shares of the company for the preceding three days prior to the issue of such bonds.”

The statement said the bond would have a zero coupon with a maturity date of November 2011. It gave no other details.

Market dealers said the issue would allow Aldar to get cash needed to fund its projects in the UAE and other countries. “As for Mubadala, the bonds will allow it to expand its shareholding and give it stronger participation and decision-making powers in Aldar’s strategy in the future,” said Karim Helmi of Emirates Securities Company.

“Both companies will benefit from this issue as Aldar will invest the cash from the bonds in new projects, while Mubadala could expand its stake and at the same time sell part of the shares. Don’t forget Mubadala is not paying interest.”

The government-controlled Mubadala is already one of the largest shareholders in Aldar, which is involved in massive projects in real estate and other sectors, estimated at Dh2.3 trillion at the end of February.

Aldar has been locked in plans to issue bonds to finance its projects and capital expansions. At a recent meeting in Abu Dhabi, Aldar’s board said more bonds would be issued in the future to raise capital

In 2006, the company decided to issue convertible sukuk in batches as it pushes ahead with expansion plans. Another decision involved the addition of nearly 22 million shares in mid-2007 and 175 million shares in November – a share dilution of about 11 per cent so far. Total additional shares could be another 1.6 billion.

In March, Aldar said the board approved an increase of around Dh24m in its capital. The new capital stood at Dh2.344bn from Dh2.320bn.

The surge in its business more than doubled the company’s net income in the first quarter of this year to around Dh1.36bn from around Dh450.6m in the same period of last year.

Besides Mubadala, the other key shareholders in Aldar are Abu Dhabi Investment Company, Abu Dhabi National Hotels Company, National Corporation for Tourism & Hotels, and The National Investor. More than 25,000 individual investors from the UAE and other countries also have shares.