First Abu Dhabi Bank weighs multibillion rights issue, eyes roughly $5 billion

What happened

Executives at First Abu Dhabi Bank are testing the waters for a possible rights issue, with a working figure near $5 billion that could still move up or down. These initial conversations have been described as preliminary by people familiar with the matter who asked not to be named.

They have also held informal discussions with a handful of big Wall Street firms, but there is no sign any bank has been formally engaged. FAB declined to offer a comment. If it proceeds, the deal could be one of the larger rights offerings seen in recent years.

Why it is on the table

One person said the goal is to raise cash to pursue opportunities inside the United Arab Emirates. No decision has been made on how much to raise or when to launch, and the bank could ultimately choose not to move ahead.

In plain English, a rights issue lets current shareholders buy more shares in proportion to what they already own. FAB and ADCB both count Mubadala Investment Co. among their top shareholders.

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Where FAB stands now

FAB is the largest bank in the UAE by assets at $400 billion and carries a market capitalization of $59 billion. It is also the main channel for Abu Dhabi's oil wealth into the local economy.

The bank topped analyst expectations for both operating income and profit in the third quarter. Its shares have beaten Abu Dhabi's benchmark this year after bouncing back from a trough following the onset of war, and management has sounded upbeat. "The UAE's next phase of growth presents significant opportunities, driven by ambitious investment programs, economic diversification and deeper integration across global markets," CEO Hana Al Rostamani said, adding, "FAB is well positioned to support these ambitions."

Strategy moves and what to watch

In the months before the conflict, FAB was pushing through a major internal reshuffle under Al Rostamani, who has repeatedly refreshed senior leadership and brought in veterans from global banks. The lender has also ventured abroad, including acquiring Bank Audi's unit in Egypt in 2021.

The bottom line: if FAB proceeds with a sizable rights issue, existing shareholders could be asked to put in more capital to back expansion at home. For your portfolio, watch for clarity on size and timing, whether any banks are mandated to run the deal, and how the bank frames use of proceeds, given recent capital raises by peers.

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