Union Properties eyes bigger stake in Egypt's Palm Hills

The UAE's UPP Capital plans to subscribe to the rights issue of the Egyptian developer

Union Properties's investment arm will subscribe to the rights issue of Egypt's Palm Hills Developments [representational image of Cairo].
Union Properties's investment arm will subscribe to the rights issue of Egypt's Palm Hills Developments [representational image of Cairo].

The investment arm of Dubai-based Union Properties (UPP Capital) said it plans to subscribe to the rights issue of Palm Hills Developments, a move that would increase its exposure to the stock of the Egyptian developer.

In a statement, UPP Capital said it is “reviewing the benefits the subscription will bring to the company, its parent company, and its shareholders to ensure strategic investment returns that fulfill its aspirations”.

The announcement came more than a month after the extraordinary general assembly of Palm Hills Developments approved on 6 September 2018 to increase its issued share capital by $85.9m (EGP1.54bn) though a rights issue.

READ: UAE developer Union Properties forms investment arm

UPP Capital already owns 16.63% of all issued Palm Hills Developments shares.

A rights issue offering is a group of rights extended to existing shareholders to purchase additional stock shares – also known as subscription warrants – in proportion to their existing holdings.

It is typically seen as a way for companies to raise capital by giving existing shareholders the right, but not the obligation, to buy shares at a discounted rate at a set date in the future.

READ: Al Ramz reappointed liquidity provider for UAE’s Union Properties

However, raising capital is not the only reason a firm may issue a rights offering. Extra capital could fund additional expenditures, say for a new development or other facilities that require initial investment even when a company has a positive balance sheet.

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