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Abu Dhabi, UAEWednesday 20 June 2018

Shuaa plans reintroduction of Egyptian brokerage business

Dubai-listed investment bank has started talks with authorities in Egypt to offer securities services

Shuaa, which was the top investment bank in the Arabian Gulf region before the 2008 financial crisis, has expressed intentions to gain scale through acquisitions. Jaime Puebla / The National
Shuaa, which was the top investment bank in the Arabian Gulf region before the 2008 financial crisis, has expressed intentions to gain scale through acquisitions. Jaime Puebla / The National

Shuaa Capital, a Dubai-based investment bank, plans to reintroduce brokerage services in the Egyptian market that were suspended in the most populous Arab country after the 2008 financial crisis took toll on trading volumes.

Shuaa has formally stared discussions with Egyptian regulators to bring its securities business back to North African country, a key step in expanding its brokerage services which are part of its broader capital markets offering, the firm said in a statement to Dubai Financial Market, where its shares are traded.

Shuaa was one of the top investment banks in the region before the global financial crisis hit almost a decade ago. At that time, the firm and several other financial services companies fell on hard times. Many were forced to either close or suspend their brokerage arms as revenues slumped and trading activity came to a grinding halt. The regional economies, which had recovered well from the crisis, are once again facing weaker economic growth on the back of persistently low oil prices.

The GCC benchmark indexes have underperformed the global equities rally this year amid subdued trading volumes. However, Shuaa said its move to Egypt reflected the firm’s confidence in the fundamentals and the depth of opportunities available in the Egyptian market.

“There still exists significant untapped potential to serve clients eyeing the Egyptian market with our securities business,” said Fawad Tariq-Khan, who was appointed the firm’s general manager in May. “We look forward to relaunching operations soon, with the guidance of the Egyptian authorities and regulators.”

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Shuaa, which was admitted to the Dubai and Abu Dhabi exchanges as market-maker earlier this year, intends to use the Egyptian platform to allow clients direct access to other markets through a single trading account.

The firm, which is 48.36 per cent owned by Abu Dhabi Financial Group, has returned to profitability this year and posted its biggest half-yearly profit since 2009. It has been looking to expand its regional presence through acquisitions and recapture market share in securities and advisory businesses.

Merger talks between Shuaa and the Bahrain-based GFH Financial Group (GFH) were suspended in June they could not reach agreement on acquisition terms. “Therefore, both parties have agreed to postpone the discussions regarding the acquisition for the time being,” GFH said in a bourse filing at the time. The Shuaa chairman Jassim Alseddiqi in April said the firm was considering taking a stake in an unnamed GCC-based financial services firm, which was separate from GFH deal, talks for which were happening at the time.