Shuaa signs deal to sell securities brokerage and market-making businesses

The move is part of the company's plans to sell non-core assets and focus on investment banking activities

A subsidiary of Dubai listed Shuaa Capital will be managing an investment portfolio of assets worth $400 million. Jaime Puebla/The National

Shuaa Capital is selling its securities brokerage and market-making businesses to Abu Dhabi-based International Holdings Company, as the Dubai-listed investment bank exits non-core assets.

Shuaa has signed an agreement for the sale with IHC RSC, a subsidiary of International Holdings. The sale is subject to regulatory approval it said in a statement to the Dubai Financial Market, where its shares trade.

Under the terms of the all-cash deal, IHC, an Abu Dhabi-listed investment holding company, will acquire the operations of both businesses, which currently function as standalone entities within Shuaa’s portfolio, the company said without giving the value of the deal.

“This sale is part of the strategy of the combined entity to exit non-core businesses and focus on asset management and investment banking,” Shuaa said in the bourse filing.

Shuaa said in June it was merging with its largest shareholder, Abu Dhabi Financial Group (ADFG). The deal, effectively a reverse takeover of Shuaa by ADFG, was approved by shareholders in July.

The deal creates a group with $12.8 billion of assets under management, of which $11.5bn was previously managed by ADFG. The shareholders of ADFG received 58 per cent of the shares in the combined entity, with Shuaa shareholders receiving the remaining 42 per cent.

The company said last month that it was convening another shareholders' meeting to amend the company's articles of association, increase the number of board members to seven from five and approve a name change of the combined entity to ADFG.

The investment bank swung to a Dh31.6 million loss in the second quarter of this year, compared with a profit of Dh14.6m in the same period last year, despite revenue during the reporting period increasing by 54 per cent to Dh47.5m.

The bottom line was dented by higher general and administrative expenses, which were up 46 per cent. For the six-month period, the company declared a loss of Dh56.5m, compared to a profit of Dh26.3m in the same period last year despite revenue increasing by 61 per cent to Dh102.9m. Provisions for impairments for the half-year period stood at Dh18.3m.