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Abu Dhabi, UAEMonday 10 December 2018

Dubai’s Shuaa Capital swings to profit in third quarter, eyes acquisitions

Nine-month net profit was highest since 2007

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-listed investment bank, is eyeing acquisitions as it swung to a third quarter net profit thanks to cost cuts and a strong performance in the real estate asset management and credit businesses, the company said.

Net profit in the three months ending September 30 reached Dh23 million (US$6.2m) compared with a net loss of Dh35.3m a year earlier, the investment bank said in a statement to the Dubai Financial Market (DFM).

“Our operations are now stream-lined and we are actively looking for growth in the Middle East and North Africa region through both organic expansion and acquisitions,” said Fawad Tariq-Khan, general manager of SHUAA Capital.

Nine-month net profit reached Dh60m, the highest for an annual period since 2007, compared with a net loss of Dh113.6m in a year-earlier period.

However, third-quarter revenue fell 39 per cent to Dh29.6m from Dh48.7m a year ago.

Total expenses in the third quarter fell 85 per cent to Dh13.5m from Dh87.3m a year earlier, the company's financial statements showed.

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Profit at the real estate asset management business soared to Dh6.3m in the third quarter from Dh0.7m, while the credit lines business swung to a profit of Dh15.7m, compared to a loss of Dh38.6m a year earlier, the statement said.

The fortunes of Shuaa began to turn around in 2014. Alternative investment company Abu Dhabi Financial Group also bought last year a 48.36 per cent stake in Shuaa and fleshed out a new strategy to breathe life into the struggling Dubai investment bank that focused on growing assets under its management, leveraging its balance sheet and increasing its business in Saudi Arabia and Egypt.

Shuaa cited the announcement of plans to manage the development of the Dh1.5 billion ‘Dubawi’ mixed-use tower on Dubai’s Sheikh Zayed Road as a key achievement.

Meanwhile, the group’s credit business – comprising Gulf Finance UAE and its sharia-compliant arm Gulf Finance Saudi Arabia – has benefited from the group’s 2014 turnaround strategy, Shuaa noted, which has seen the company return to profit that year after making a loss of Dh300m in 2011.

In the third quarter, the company announced a planned expansion of its securities brokerage business that includes the launch of a Cairo office by the end of the year. Meanwhile, Shuaa’s capital markets division “continues to break ground and build on strength in the market making space”, the company said.