DUBAI: Dubai's Mashreq has increased the limit on foreign ownership of its shares to 49 percent, its chief executive said on Monday, in line with a wider move by companies in the United Arab Emirates to open up to international investors.
Companies and banks in the UAE and Qatar are reviewing their foreign ownership caps ahead of a planned upgrade by international index compiler MSCI to emerging market status for these countries in May, which is expected to attract fresh foreign money.
On Sunday, property developer Deyaar said it would allow foreign investors to own shares for the first time, up to a limit of 25 percent, subject to shareholder approval.
"We've tested the market and have seen a great appetite from foreign investors for the bank's shares. This (increase in the cap) is effective immediately," Abdulaziz al-Ghurair told Reuters by phone.
"As a result, we expect the share price to improve. It's a natural development for a bank like Mashreq to go global."
Mashreq had in September last year raised the foreign ownership limit to 20 percent.
Foreigners currently own 2 percent of the bank's shares, according to bourse data, marginally up from the 1.9 percent they owned when the bank adjusted the limit in September.
For foreigners to reach 49 percent ownership of the bank, the al-Ghurair family would have to offload some of its stake - the family currently own 70.5 percent of the bank, split between Saif Ahmed al-Ghurair and Abdulla Ahmed al-Ghurair Investment Co., according to the Dubai bourse.
Under UAE rules, most companies listed in Abu Dhabi and Dubai may choose to allow investors from outside the UAE or GCC to buy up to 49 per cent of their shares. However, many choose to set their foreign ownership limits at a lower level and some do not allow any foreign ownership at all.
Shares in Mashreq, which are one of the more illiquid stocks on the Dubai bourse, ended Monday 4 percent lower at 96 dirhams against a 0.8 percent increase on the wider bourse. However, only 650 shares traded. (Reuters)