Dubai Islamic Bank launches Tamweel takeover

Dubai Islamic Bank, which holds 58.2 per cent of the mortgage company, has launched a takeover bid on Tamweel.

The Emirates' first Sharia-compliant lender, which holds a 58.2 per cent stake in Tamweel, plans to buy out minority shareholders and delist the shares. Ryan Carter / The National

Dubai Islamic Bank (DIB) has launched a takeover bid on Tamweel.

The Emirates' first Sharia-compliant lender, which holds 58.2 per cent in the mortgage company, plans to buy out minority shareholders and delist the shares.

Tamweel's investors will be asked to swap their shares for new shares issued by DIB, the lender said in an emailed statement.

The deal is subject to approval from shareholders and regulators, including the Ministry of Economy, the Securities and Commodities Authority, the Central Bank and the Dubai Financial Market.

"The bank is confident that this offer serves the best interest of shareholders in both entities," the statement said.

"It gives every Tamweel shareholder the opportunity to become a shareholder in a more lucrative and sizeable entity with a relatively liquid market in its shares while remaining exposed to the same industry sector and the Tamweel business itself."

Shares in Tamweel were suspended in November 2008 when a liquidity crunch at the onset of the financial crisis forced it to cease trading. It resumed trading in May 2011 after the company returned to profitability and has since become a popular stock held by retail investors. DIB will offer Tamweel's shareholders 10 shares, for every 18 of the mortgage firm's shares held by them, the statement said.

PricewaterhouseCoopers determined that the fair value for each share in DIB and Tamweel underlying the intended swap is set at Dh2.25 and Dh1.25 respectively, it added.

"They have realised that to survive in the mortgage game you need an access to deposits," said Sebastien Henin, a portfolio manager at The National Investor, an investment company in Abu Dhabi.

DIB's full control of Tamweel comes after the mortgage company made two major debt issues last year to get access to cheap capital.

"They can't rely on themselves only," Mr Henin said. "They need stronger support from the parent company."

If successful, Tamweel will become the third publicly listed firm to exit a UAE bourse.

Last year, Damas delisted its shares after it was taken over by the Qatari retail company Mannai Corporation.

In 2010, Aabar Investments delisted from the Abu Dhabi Securities Exchange after a full takeover by the state-controlled fund International Petroleum Investment Company.