Dubai Financial Market suspends trading of Arabtec shares amid rumours of shareholder deal

DUBAI, United Arab Emirates – The Dubai Financial Market on Thursday suspended trading shares of the emirate’s largest construction company, Arabtec Holding, after rumours swirled that the firm’s biggest shareholder was in talks to sell off a large portion of his stake.

The decision was announced on the market’s website following instructions from the United Arab Emirates’ Securities and Commodities Authority. The statement said the trading of Arabtec shares had been suspended pending clarification of media reports about strategic partners’ stakes in the firm.

The National, a UAE newspaper, reported that shares in Arabtec soared Tuesday when it emerged that the firm’s second largest shareholder — Aabar Investments, a state-run fund backed by Abu Dhabi — may be in talks with Arabtec’s former chief executive officer Hasan Ismaik to buy at least half of his stake in the contracting giant.

A lack of clarity in recent months about Aabar Investments’ decision to cut its stake from more than 21 per cent to just under 19 per cent in Arabtec raised fears among investors that the oil-rich emirate of Abu Dhabi was considering pulling the plug on other Dubai investments.

Weeks after Aabar trimmed its shares, Ismaik abruptly resigned, but not before he had amassed a nearly 29 per cent stake in the company, making him the firm’s biggest shareholder.

The decision by the regulator on Thursday to suspend trading of Arabtec shares amid fresh rumours of a deal among the strategic shareholders was hailed by analysts as a positive step.

“Any action from a regulator to get more transparency so that investors can make an informed decision is always a good thing,” said Yong Wei Lee, the head of MENA equities at Emirates NBD Asset Management.

Mohammed Yasin, managing director at National Bank of Abu Dhabi Securities, said the regulators stepped in and decided to suspend trading to get more clarification from Arabtec to make sure there are no misunderstandings or reactions to reports that are not confirmed by the firm itself, but that could lead to speculators taking the share up or down.

“I think the regulator in this case is acting within its authority to ensure that full transparency is available to all,” Yasin said.

“When you have an ex-CEO going and buying and selling to a strategic partner already in the company … these kinds of discussions should be disclosed,” he added. “There will be implications for the rest of the shareholders.”