Aldar Properties said yesterday that its biggest shareholder converted bonds in the Abu Dhabi developer to shares.
Mubadala, the strategic investment company owned by the Abu Dhabi Government, converted its debt holdings at Dh1.75 a share, Aldar said in a statement posted on the Abu Dhabi Securities Exchange.
The transaction boosted Aldar's share capital by 10 per cent to Dh4.48 billion (US$1.22bn). Shares fell 1.95 per cent, the first decline after seven trading days of advances, to close at Dh1.51 after the announcement was posted.
Among other property developers in the Emirates, it was hit hard when the global financial crisis wiped the value off assets and cut access to funds. It received several capital injections as part of convertible bonds issued to Mubadala Development.
Aldar has since returned to profitability and is in the process of a long-awaited merger with the capital's second-biggest developer, Sorouh Real Estate, that would create an entity with assets worth $15bn.
Aldar and Sorouh will each hold meetings to allow shareholders to vote on the merger tomorrow.
If approved by the necessary quorum, the merger to will take place on June 30, and Mubadala would emerge as the biggest shareholder with a stake of 19.5 per cent.
"The market requires consolidation in the real estate sector in the emirate of Abu Dhabi," said Tariq Qaqish, the head of asset management at Al Mal Capital in Dubai. "The synergy will play a big role in the company's future earnings."
Aldar's shares have risen 18.9 per cent since the start of the year, while Sorouh's shares have advanced 48 per cent in the same period to close at Dh1.85 each.