Al Mal Capital’s real estate investment trust (REIT) raised AED 180 mn after completing a tradable rights issue in a bid to grow and acquire new assets, it said in a DFM disclosure (pdf). The transaction — which was greenlit by the Securities and Commodities Authority — increased the REIT’s total equity to over AED 540 mn. Al Mal is a unit of Dubai Investments.

REFRESHER- Al Mal Capital’s REIT said in February it planned to issue 400 mn new units at AED 1.1 apiece, leading to a share capital increase of up to AED 440 mn if fully subscribed. The company said it would use the proceeds to execute its investment strategy (pdf), which is geared at diversifying the portfolio, with a minimum of 75% of the funds allocated in the UAE and up to 25% in the GCC and other countries.

The mechanics: Existing unit holders received tradable rights at a ratio of one right for every 0.88 units they owned on 23 February. Every full right allowed the unit owners to ultimately buy a new unit at a price of AED 1.10. Rights were tradeable on the Dubai Financial Market from 26 February to 15 March 2024.

SOUND SMART- How rights work: Existing unit holders have the option of not exercising their rights (ie: doing nothing); they can exercise their rights (buy units in proportion to the rights they hold); or trade the rights (sell them to someone else through a DFM-listed broker — and buy more rights if they want more of the Al Mal REIT). Investors who own no units can buy the rights from current unit holders, and folks who do nothing or sell their rights would be diluted down if the rights issuance sees others subscribing.

What they said: “Using the increased capital now available to us as a result of this rights issue, AMCREIT will continue with its plans to diversify our portfolio through the acquisition of high-quality education and healthcare assets,” said Al Mal Capital CEO Naser Al Nabulsi.

What’s next for Al Mal? The Dubai-based asset manager plans to acquire an AED 400 mn educational asset — potentially growing the portfolio's value too close to AED 1 bn — and a healthcare facility later in the year, the disclosure said. The REIT said at the start of the month that it would purchase a new school in Dubai within the next two months.

Uh, Enterprise? What’s a REIT? A real estate investment trust is a mutual fund that owns, finances or manages income-generating real estate assets — commercial, residential, office, and other properties. Some will also invest in real-estate-related securities or private equity transactions that are directly related to the industry.

The REIT could kick off another capital increase in 4Q 2024, with plans to up the number of units available to 1.5-1.8 bn units by year-end, Al Mal Capital MENA Direct Investments Director Sanjay Vig previously said.

IN OTHER CAPITAL MARKETS NEWS-

DFM greenlights price stabilization for BHM Capital: Financial services firm BHM Capital received approval from the Dubai Financial Market (DFM) to carry out price stabilization mechanisms for listed stocks, according to a press release (pdf). The approval will allow BHM Capital to conduct price stabilization transactions to prop up companies’ share prices.

SOUND SMART- Price stabilizing mechanisms involve underwriters purchasing shares in the secondary market to manage volatility in share prices after an initial public offering or other transactions. Think of it as a really strategic share-buyback program run by a banker with the aim of helping a share perform better out of the gate. Share stabilization programs are typically time-limited and wrap up in a matter of weeks after a transaction.

Spinneys has tapped BHM Capital as its price stabilization manager, making the retail chain the first company to benefit from BHM Capital’s service following its debut on DFM. The company is offering a 25% stake on the DFM, and is set to raise up to AED 1.38 bn, with shares expected to begin trading on 9 May.

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