x Abu Dhabi, UAEThursday 27 July 2017

Gulf family brokers merge to weather industry slowdown

Wafa and MAC sign deal to integrate and broaden their services.

Two Gulf family-owned brokerages are merging their operations to weather the industry downturn by offering a broader suite of services. Wafa Financial Services, an Abu Dhabi brokerage owned by the Bin Hamoodah Group, signed a contract yesterday to merge with MAC, the investment arm of Kuwait's Kharafi Group. MAC is the largest brokerage in Tunisia.

The merger will go ahead pending approval from the Emirates Securities and Commodities Authority (SCA), said Fathi ben Grira, who heads Wafa Financial Services. The newly joined brokerages will be renamed Mena Corp and will be integrated into an all-inclusive financial services group, Mr ben Grira said. The group will offer financial advisory, equity research, asset management and brokerage services.

The merger will provide Wafa with financial advisory and asset management services as well as exposure to the north African market. Wafa offers MAC access to the UAE markets. The tie-up will be the first since the SCA introduced regulations this month to govern mergers of brokerages. "Through MAC, Wafa will be able to provide its clients easy access to north Africa, including Tunisia, Morocco and soon Algeria," said Mr ben Grira. "Because today everyone speaks about the Middle East and North Africa but the reality is [for most firms] MENA stops at Cairo."

Volumes on the Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM) have tumbled since the start of the year, forcing the industry to consolidate as brokerages merge or risk closure. Twelve brokerages licensed to trade on the ADX and DFM have submitted requests to the regulator to suspend operations this year, the SCA said. Five companies received approval to close and their licences have been suspended for one year. There are 83 brokerages trading on the two main UAE bourses.

Bin Hamoodah Group owns the UAE rights to Chevrolet, the dairy company Lacnor and the bottled water company Oasis. Kharafi Group has activities in construction, manufacturing and commerce and also owns Americana, the largest food company in the Middle East. halsayegh@thenational.ae