The Abu Dhabi Financial Group rebranded combined entity will manage 12,500 clients and $12.8bn assets
Shuaa Capital will continue to operate as a sub-brand in the Dubai investment bank’s planned merger with its largest shareholder Abu Dhabi Financial Group (ADFG) in Q3 this year.
The combined entity, which will be branded ADFG and will manage 12,500 clients and $12.8 billion (AED47bn) assets.
“The Shuaa brand will be a sub-brand, so certain activities will still carry the Shuaa brand, but the group is going to be ADFG. So the securities business, for example, will carry the Shuaa securities brand,” said ADFG founding CEO Jassim Al Seddiqi.
The decision to keep the brand alive is not permanent, however, as Al Seddiqi said the group will “assess later on what’s best for the new combined entity [in terms of] branding strategy”.
The merger will see Shuaa, which is listed on the Dubai Financial Market (DFM), issue 1.47 billion new shares to ADFG’s parent company Abu Dhabi Capital Management (ADCM), in return for the entire issued share capital of ADFG.
As a result, ADCM will own 58 per cent of the combined entity, which will also remain listed on the DFM, while existing Shuaa shareholders will control the remaining stake.
The combined entity will operate in seven countries, according to Al Seddiqi, mainly located in the GCC and the UK.
“We expect revenue synergies and growth perspectives and sustainability in the coming years,” he said.
The transaction has been approved by Shuaa's board, but still requires its shareholders’ regulatory approvals.
The agreed valuation represents a premium of over 60% to Shuaa’s share price on 21 March 2019, the last trading day ahead of the possible merger announcement.
Following the admission of the new Shuaa shares, its issued share capital will rise to 2.53 billion shares, and will be subject to a 12-month lock-up from the date of admission.
ADFG bought a 48.36 per cent stake in Shuaa in 2016 to help sustain the struggling investment bank through the 2008 financial crisis by growing assets under management, leveraging its balance sheet and expanding its business in Saudi Arabia and Egypt.
However, it recorded losses of $6.8 million for the first quarter of 2019 compared to $3.2m the previous year, largely due to high expenses and its exposure to now-bankrupt Abraaj.