By Mark DeWeaver.
Original shares of Al Mansour Bank (BMNS) resumed trading on July 1 following the announcement of the bank’s capital increase and dividend plan. All shareholders will receive a 51% bonus share issue along with an IQD 0.068 / share dividend. Qatar National Bank (QNB) is also buying 85 bn new shares at IQD 1.60 / share, which will raise its stake from 23% to 51%.
This is an exciting development. Before the capital increase, BMNS had only IQD 100 bn in capital, making it just one of a number of mid-sized Iraqi lenders. The new funds will raise the bank’s capital to IQD 236 bn, making it second only to BUND, which now has IQD 250 bn.
The terms of the deal were also not unfavorable to minority shareholders. QNB’s total cost per new share, adjusting for the dividend and bonus shares it received, comes to IQD 1.39—a 7% premium to the last traded price of IQD 1.30.
The July 1 closing price was IQD 1.18. For everyone but QNB, this must have been the best one-day return in the ISX all year.
Suppose you were holding one BMNS share worth IQD 1.30 on the last trading date. Following the bonus issue, you had 1.51 new shares, along with the IQD 0.068 dividend. At the July 1 close, you ended up with cash and shares worth IQD 1.18 * 1.51 shares + IQD 0.068 = IQD 1.85. The value of your account had increased by a whopping 42%.
Not bad for a bear market.