CommercialBank announces concluding its capital raising successfully

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Mr. Omar Alfardan, member of the Board of Directors and Mr. Andy Stevens, Group CEO of Commercialbank, were present at a special function held at the London Stock Exchange on Thursday the 3rd July 2008, to mark the formal listing of the Commercialbank GDRs for official trading on the LSE.

The capital raising was accomplished as a three part process via a Rights Offering, Global Depository Receipt (GDR's) Offering and a Private Placement of New Ordinary Shares. The successful issue of a total of 24 million new ordinary shares, at a price of QR136.5 per share, has raised QR3.276bn or approximately $900m. This transaction will strengthen Commercialbank's Capital ratios and enable sustained rapid growth of its diversified businesses in the booming economies of Qatar and the GCC.

This innovative and pioneering structure has enabled the Bank to maintain existing shareholder value and pre-emption rights, to expand the international investor base of the Bank, and to ensure compliance with local listing regulations (including maximum non Qatari shareholding limit of 25%). The successful GDR transaction represents the largest internationally distributed GDR issue out of the GCC region, and also the first by a Qatari bank.

GDRs are negotiable certificates representing ownership of Commercialbank ordinary shares which are listed and traded on the Doha Securities Market. The GDRs which are denominated in US Dollars will be listed on the London Stock Exchange (LSE) and traded independently with effect from 3rd July 2008.

His Excellency, Mr Abdullah bin Khalifa Al Attiyah, Chairman of Commercialbank, stated that this was a proud moment for Commercialbank, and marked yet another milestone in the rapid growth history of the Bank. He attributed the strong global demand and the success of the international GDR offering to the global recognition of the growing economic strength and stature of the State of Qatar, and the rapid growth achieved under the vision and wise leadership of His Highness the Emir, Sheik Hamad bin Khalifa Al Thani.

Mr Hussein Alfardan, Managing Director of Commercialbank, was also delighted with the success of the capital raising transaction, which he said was further testimony to the performance of Commercialbank, and its superior growth and profitability track record over many years. This also reflected the growing confidence of international investors in the stability and effective governance of the financial sector and capital markets in Qatar. He thanked His Excellency the Governor of the Qatar Central Bank and His Excellency the Chairman of Qatar Financial Market Authority, for their continued guidance and support to Commercialbank.

At the special function held at the London Stock Exchange to mark the historic occasion for the Bank, Mr Andy Stevens, Group CEO of Commercialbank, stated that he was very pleased with the significant over-subscription of the GDR issue, and the strong demand from global institutional investors across the UK, USA, and Europe, as well as from the GCC and Asia. He highlighted the success in challenging market conditions, given that the Commercialbank GDR issue was launched and smoothly concluded during a period of turbulent and weak global equity markets. Mr Stevens added that Commercialbank has been a pioneer in diversifying its funding sources and its investor base, and that the Bank now has the distinction of being the first Qatari bank to have it's GDRs as well as its bonds listed on the London Stock Exchange.

Earlier in October 2006, Commercialbank was the first Qatari bank to successfully issue five year USD bonds in the international debt markets, through its $1.5bn EMTN Programme.

Pre-Emptive Rights Issue

At the first stage, the opportunity to subscribe to Rights shares was made available to all existing shareholders on a 2 new shares for every 15 existing shares basis, and the subscription period ran from the 5th to the 19th of June. Approximately 4.665 million shares were taken up by existing shareholders through this leg of the transaction.

Global Depository Receipt

Unsubscribed shares from the pre-emptive rights issue were then offered to international institutional investors in the form of GDRs, via a listing on the London Stock Exchange. The GDRs were issued on a basis of 5 GDRs being equal to 1 ordinary share with the offering being fully fungible. The marketing period ran from 12th to 26th June and was marketed internationally through road shows in major financial centres. 92.175 million GDRs, equivalent to 18.435 million shares, were successfully issued via this tranche. The GDR issue was substantially oversubscribed at 1.35 times , but the final size was scaled back to 18.435 milion shares to preserve the maximum non Qatari ownership ratio within 25% of the Bank's total paid up share capital, as currently prescribed under Qatari law and DSM regulations.

Private Placing

The balance of 900,000 shares was placed with five Qatari shareholders, as a back-ended placement in Qatar to manage the foreign shareholding limit, in accordance with the terms of the resolution that was passed at the last Extra-ordinary General Assembly meeting on 19th May 2008.

Pricing

The final effective subscription price was set at QR136.50 per share and was applied to all three components of the equity issuing process. The price was determined via a book build process led by Morgan Stanley and was set to a maximum of QR175 per share and a minimum of 85% of the closing price of the stock on the 26th June, the final day of GDR subscription. The actual price was set at QR136.50, which represents 95% of the closing price of QR143.90. The Issue of new shares on at market basis has therefore resulted in a material improvement of book value per share.

Refund cheques for excess subscription monies equal to QR38.5 per Rights share applied for and allocated have already been mailed to all the Rights issue applicants.

Key Partners

The Global Coordinator and Sole Book Runner was Morgan Stanley, with the Lead Manager of the transaction being Societe Generale Corporate & Investment Banking with Citibank NA acting as the Global Depository.