Shuaa Capital is to acquire two financial services firms from Integrated Financial Group, a unit of Abu Dhabi Financial Group (ADFG).
The sale of Integrated Capital and Integrated Securities represents a move to bolster Shuaa’s financial services portfolio by ADFG, its major shareholder. ADFG acquired a 48.3 per cent stake in the Dubai-based investment bank from Dubai Group in 2016.
Dubai-listed Shuaa said that the transaction remains subject to regulatory approval but is expected to close in the coming weeks. The financial aspects of the deal were not disclosed.
“The company [ADFG] is contemplating to restore Shuaa to its rightful position as a leader in capital markets and investment banking in the region,” said Jassim Alseddiqi, Shuaa Capital’s chairman, who is also ADFG’s chief executive.
“This is a gradual process, with an emphasis on building the right synergies and bringing the best products and services to the company’s clients, investors and stakeholders.”
Shares of Shuaa Capital surged by 14.7 per cent to Dh1.87 on Sunday on the news, along with a report by the regional news service Meed claiming the bank was considering a merger with a larger regional entity.
Mr Alseddiqi declined to comment directly on the report but told The National that further mergers and acquisitions would form part of Shuaa's strategy going forward.
He declined to comment on the suggestion that Shuaa may merge with the Bahraini investment firm GFH, of which ADFG is the largest shareholder.
Integrated Capital acts as ADFG’s capital markets arm, offering equity and debt capital market services. The company acted as the co-lead on Etihad Airways Partners’ debut US$500 million bond issue last year.
Integrated Securities, acquired by ADFG from FGB in 2015, is a securities brokerage with more than 3,000 retail and institutional clients. The deal to acquire Integrated Capital and Integrated Securities follows Shuaa’s acquisition of a 14 per cent stake in Bahrain’s Khaleeji Commercial Bank in December.
The acquisitions come after Mr Alseddiqi last month set a target of increasing the bank’s assets under management to Dh5 billion by the end of the year from their current level of Dh1.8bn, eventually rising to Dh9 bn by 2020.
Mr Alseddiqi said the bank was looking at asset-backed lending for its SME lending arm, Gulf Finance, which has suffered large losses in recent years.
“Shuaa had a very good name in investment banking once and I can’t see why it can’t reclaim a certain amount of prestige and market presence with some resources,” said Sanyalak Manibhandu, the head of research at NBAD Securities in Abu Dhabi.
"This is probably a good move but it will be a bad move if they got rid of [its SME] credit business because I think the credit business, if it was given some time, could also contribute very well to an enlarged financial services group."
Shuaa Capital grew from a boutique research specialist to a major investment bank in the early 2000s, running in parallel with Dubai’s economic rise.
The bank fell upon hard times following the emirate’s economic crash in 2008, compounded by a series of financial scandals, and has faced several restructuring exercises.
The bank last month reported a loss of Dh132.5m for last year, compared with a Dh190.3m loss for the year earlier.
jeverington@thenational.ae
* with additional reporting by Dania Saadi and Mahmoud Kassem
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