Sorouh cuts foreign ownership by 5%

The country's second largest property developer wants to reduce volatility by reducing offshore shareholders.

Sorouh, Abu Dhabi's second largest property developer, has reduced the amount of shares foreigners can own in the company. In a statement to Abu Dhabi Securities Exchange, Sorouh said it had cut its foreign ownership limit from 20 to 15 per cent because of recent share volatility. "The Board has taken this decision to protect the interests of Sorouh's long term investors, both local and foreign," it said in a statement. "The step follows the recent volatility in the share price driven by short term speculation," it added. Despite the move, its share price fell by nearly ten per cent this morning, taking it to its lowest level since May 2007. Sorouh's shares have declined sharply since the summer. Its stock was trading at Dh9.76 in July this year, while this morning they stood at Dh2.96. Some observers expressed puzzlement at the decision, saying it would reduce the number of potential buyers of the shares at a time when prices are under pressure already. Vyas Jayabhanu, the head of Al Dhafra brokerage in Abu Dhabi, said Sorouh's move had come at the wrong time and "didn't make sense". "This is creating very negative sentiment at a time when we need volumes, especially at a time when local markets are asking the world to invest in their companies," he said. [e-mail]