‘No final decision yet’ on merger talks between GFH and Shuaa Capital

Bahrain's GFH and Dubai's Shuaa Capital have been in discussions over a possible merger that could create an investment bank with assets exceeding US$3.65 billion.

“GFH has been in discussion with several financial institutions, including Shuaa Capital, for potential majority shares acquisitions of those financial institutions and/or mergers,” the Islamic investment firm said on Tuesday in a statement to the Dubai Financial Market. “However, no final decision has been reached as of yet.”

Abu Dhabi Financial Group (ADFG) is the biggest shareholder of both companies.

Shares of both GFH and Shuaa have surged since Sunday amid speculation of a merger. However, GFH shares on Tuesday closed down 0.73 per cent at Dh2.73, while Shuaa finished 4.15 per cent lower at Dh1.85 in Dubai. Shuaa had assets of Dh1.3bn at the end of 2016, while GFH had assets of $3.3bn.

ADFG chairman Jassim Alseddiqi has revealed a new strategy to breathe life into the struggling Shuaa that will focus on growing assets under management, leveraging its balance sheet and increasing its business in Saudi Arabia and Egypt. He forecasts the investment bank’s assets under management to increase to Dh5bn by end of this year and Dh9bn by 2020 as a result of the new strategy.

Shuaa on Sunday said it plans to acquire two financial services firms from Integrated Financial Group, a unit of ADFG. ADFG acquired a 48.3 per cent stake in Shuaa from Dubai Group in 2016. It also has a 10 per cent stake in Manama-based GFH, making it its biggest shareholder.

ADFG, GFH and Shuaa have also strengthened their business ties. ADFG and GFH are setting up Islamic bank ADCorp in the Abu Dhabi Global Market, the emirate’s financial free zone, with an authorised capital that could exceed US$100 million.

Last year, Shuaa bought a 14 per cent stake in Bahrain’s Sharia-compliant lender Khaleeji Commercial Bank, in which GFH is the biggest shareholder.

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