Ithmaar Bank will launch its $200 million rights issue tomorrow (March 11) to help fund the planned expansion of its operations.

The rights issue is part of a capital raising initiative, which includes a Mandatory Convertible Sukuk, designed to raise a total of up to $400 million.

Ithmaar Bank, which plans to raise up to $200 million through its rights issue offering, said that during the subscription period that starts March 10 and ends on March 25, Bank shares will be offered at $0.25 par value to existing shareholders.

The announcement, by Ithmaar Bank chief executive and member of the Board, Mohamed Hussain, follows formal approval from Bahrain’s regulatory authorities for the rights issue.

“This rights issue presents a unique opportunity for current shareholders looking to further consolidate their stake in Ithmaar Bank,” said Hussain. 

“This is particularly significant as it comes ahead of our anticipated reorganisation with Shamil Bank and subsequent expansion plans,” he said.

“We decided the size of the Offering after carefully considering various factors, including the Bank’s reorganisation plans and our long-term strategy,” said Hussain.

“The capital generated from this Offering will be used, mainly, to implement our immediate strategic objectives,” he said.
 
Ithmaar Bank had, last October, announced plans for a comprehensive reorganisation with its wholly-owned subsidiary, Shamil Bank. The plans, which will see Ithmaar emerging as a premier Islamic retail bank, involve both banks pooling their resources to create a single, more efficient and significantly stronger retail-focused Islamic bank, under the Ithmaar brand. 

Preparations for the reorganisation are in the final stage and are now pending final approvals from Bahrain authorities.

“Our key strategic objective is to expand our operations through a combination of organic and inorganic activities,” said Hussain.

“The organic strategy of the Bank, following the anticipated reorganisation, is to focus on developing our retail operations and on expanding our geographical reach across the GCC region by offering a wide range of corporate banking services,” he said.
 
“The increased capital will be an important milestone in the Bank’s strategic plan,” said Hussain.

“It will help further support the Bank’s retail, corporate and financial institutions activities, and enhance shareholder value by amplifying existing synergies,” he said.

Ithmaar has appointed Shamil Bank as the Receiving Banking, and KPMG as the Issue Registrar.-TradeArabia News Service