Forsyth denies Shuaa link as fund fails to materialise

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Lawman: DFSA chief Dr Habib Al Mulla is "gathering information" on Shuaa Capital's Al Ahlia share deal.

Global investment house Forsyth Partners has denied the cancellation of its landmark Arab Asia Gateway Fund is related to accusations of alleged “share price manipulation" made against regional finance company Shuaa Capital, the group’s partner in the project.

Last September, Shuaa Asset Management — a division of Shuaa Capital — and Forsyth Partners launched the Arab Asia Gateway Fund for investment opportunities in the Middle East and Asia — after much hype however, the fund failed to materialise.

Earlier this month, Shuaa Capital announced its plans to sue Trends magazine over an article suggesting that the company engaged in “share price manipulation” and was suffering from a “breakdown in corporate governance”.

In September during the launch of the Arab Asia Gateway fund, Paul Forsyth, CEO of Forsyth Partners, said: “For the first time in this region, both institutional and retail investors can access and benefit from a single product which is a gateway to the most promising and vibrant part of the world”, however the fund was “postponed” according to a Forsyth Partners spokesman. Denying speculation that the postponement of the Arab Asia fund was linked to the controversy surrounding Shuaa Capital, a Forsyth Partners spokesman exclusively told Arabian Business: “Following the initial announcement, the planned Arab Asia joint venture was postponed due to the changing stock market environment.”

Arabian Business contacted Shuaa Asset Management managing director Haissam Arabi, however he refused to comment on the issue. The Trends magazine report, centred around Shuaa Capital’s 2005 US$89.5m acquisition of 8.944% of Kuwait’s Al Ahlia Investment Company, accuses the group of allegedly
manipulating stocks to artificially prop up share prices.

Despite the threat of court action however, Trends has refused to back down over the article. Alistair Crighton, editor of the magazine told Arabian Business: “We are 100% behind our story. Shuaa Capital has not really addressed or refuted a single one of our allegations. We stand fully behind our story and we resent the allegations that it was malicious in any way.” Meanwhile, amid rumours that Shuaa Capital is being investigated by various market authorities, Dr Habib Al Mulla, chairman of Dubai Financial Services Authority (DFSA) told us:

“There is no investigation whatsoever at this point in time, we are just gathering information over the transaction that has been made.

“Shuaa has two subsidiaries that are regulated and monitored by the DFSA and it is our duty as regulators to look at the transaction and to [see] if anything relevant to the transaction was done legitimately or not, as the case maybe,” he continued. Asked whether he had considered suspending Shuaa Capital from the Dubai Financial Market (DFM), Al Mulla added that the “investigation” to date was “nothing that merits suspending Shuaa.”

While the Emirates Securities and Commodities Authority has denied that it is investigating Shuaa Capital, the Kuwait Stock Exchange is looking into the allegations according to local press sources.

Headquartered in the UAE, Shuaa Capital currently has total client assets under management of around US$2bn while its private equity arm, Shuaa Partners, manages US$300m in two funds that invest in the GCC and the Levant. Last year the company posted nine-month profits of US$42.2m.

The group recently agreed to increase its stake in Qatari bank, Amwal, acquired a 20% stake in Baer Capital Partners and also bought into Indian investment bank, Edelweiss Capital. With offices in London and Dubai, Forsyth Partners has over US$1.8bn in a range of funds and managed accounts, and deals with around US$2bn worth of advisory contracts.

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