FAB plans Dh15 billion rights issue at 30% discount to fund growth

Dubai: First Abu Dhabi Bank (FAB) plans to raise up to Dh15 billion through a rights issue priced at a 30% discount to its latest closing share price, as the UAE's largest bank by assets seeks additional capital to expand lending and investment across its domestic and international markets.

The bank's board approved the proposed issue of approximately 1.11 billion new shares at Dh13.52 each, compared with FAB's closing price on November 10, 2026. The transaction remains subject to shareholder and regulatory approvals, with completion expected in the first quarter of 2027.

Mubadala Investment Company, FAB's largest shareholder with a 37.9% stake, intends to subscribe for its full entitlement, the bank said on Wednesday. The proposed fundraising would give existing shareholders the opportunity to purchase additional shares in proportion to their current holdings and maintain their ownership percentage.

What new capital will fund

FAB said the proceeds would support lending growth, deeper relationships with corporate and institutional clients, and expansion across its international network. The bank also plans to invest in technology, artificial intelligence and other capabilities supporting its operations.

"The proposed Rights Issue will further strengthen FAB's ability to support the UAE's ambitions and capture the opportunities ahead," said Sheikh Tahnoon Bin Zayed Al Nahyan, Chairman of FAB.

Group Chief Executive Officer Hana Al Rostamani said the fundraising would accelerate the bank's next phase of expansion while maintaining its focus on profitability and shareholder returns.

"We will deploy capital with discipline and focus, pursuing opportunities that deepen our competitive position, expand the scale and reach of our franchise, and deliver superior, sustainable returns for our shareholders," Al Rostamani said.

FAB operates in more than 20 markets and serves clients across 25 trade corridors linked to the UAE. The bank said expanding international trade, infrastructure investment and cross-border capital flows were creating opportunities for financing and investment services.

Higher profitability targets

Alongside the proposed rights issue, FAB outlined financial targets for 2026 to 2031, including annual loan and revenue growth of 10% to 15%.

The bank is also targeting a return on tangible equity (RoTE) above 17% through the economic cycle, compared with its previous guidance of more than 16%. RoTE measures profitability relative to shareholders' tangible equity.

FAB expects to distribute more than Dh50 billion in cumulative dividends over the six-year period, subject to its financial performance and the applicable approvals.

The bank said it would aim to maintain its common equity tier 1 (CET1) capital ratio above 14% before dividends, while keeping its cost of risk below 70 basis points. CET1 is a key measure of a bank's financial strength and ability to absorb losses.

The new targets follow several years of expansion. FAB said its total assets had increased by more than 50% since 2020 to Dh1.4 trillion, while net income had doubled to Dh21.1 billion.

Its return on tangible equity rose by 6.2 percentage points to 19.2% over the same period, according to the bank. Between 2020 and 2025, FAB distributed Dh44 billion in cash dividends to shareholders.

Rights issue impact

Under the proposed transaction, FAB will issue 1.11 billion new shares at Dh13.52 each, raising approximately Dh15 billion before expenses.

A rights issue allows existing shareholders to subscribe for new shares in proportion to their holdings, usually at a discount to the prevailing market price. Shareholders who take up their full entitlement can maintain their proportional ownership, while those who do not participate may see their holdings diluted.

FAB said the offer price represents a 30% discount to its November 10 closing share price. The final entitlement ratio, eligibility date, rights-trading period and subscription timetable have yet to be announced.

Mubadala's intention to subscribe for its full entitlement means the Abu Dhabi investment company plans to maintain its 37.9% ownership stake through the transaction, assuming the issue proceeds on the proposed terms.

Shareholder vote in December

FAB will seek shareholder approval at a General Assembly meeting scheduled for December 7, 2026, subject to the required regulatory approvals.

If approved, the bank will announce the final terms, including the ex-rights date and subscription period. FAB expects to complete the fundraising during the first quarter of 2027.

The proposed issue comes as the bank positions itself for further growth in the UAE and international markets. FAB said its medium-term plans were supported by expectations of average real GDP growth of around 5% between 2026 and 2031, alongside investment in trade, infrastructure and digital capacity.