ADX-listed Sharjah Islamic Bank (SIB) is heading back to shareholders for fresh capital, with a planned AED 2.59 bn rights issue that will lift its issued share capital by 33.3% to just over AED 4.3 bn, according to a bourse filing (pdf). Proceeds will be used to strengthen capital buffers and support its asset growth as regulatory requirements evolve. Sharjah’s government — SIB’s anchor shareholder — committed to fully subscribe to its entitlement, anchoring the offering.

IN CONTEXT- The move comes as SIB — alongside Abu Dhabi Islamic Bank and Dubai Islamic Bank — was flagged by Bloomberg Intelligence as having a tighter capital cushion than top-tier peers amid rising regional risks.

The Central Bank of the UAE has already temporarily relieved banks from their buffers, with its recently rolled out resilience package allowing lenders to tap into some of their mandatory reserves and access new term facilities, which has boosted investor confidence in the banking sector.

Terms of the trade: The lender will issue roughly 1.08 bn new shares at AED 2.40 apiece, a 37% reduction to its mid-February trading value. Existing shareholders will receive one right for every three shares held, with the subscription window running from 27 April through 8 May.

New investors have two entry points — buy SIB shares before 17 April to qualify for rights automatically or purchase tradable rights on the ADX between 20 April and 1 May, which can then be exercised during the 27 April-8 May subscription window.

ADVISORS- Emirates NBD Capital is quarterbacking the transaction as lead manager and bookrunner, while Emirates NBD Bank is the lead receiving bank alongside Sharjah Islamic Bank, among others, and KPMG LG is acting as auditor.

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