Shuaa Capital eyes buyouts in Egypt to boost revenues

Dubai-based brokerage looking at HC Securities, Beltone Financial as likely targets
Shuaa Capital eyes buyouts in Egypt to boost revenues
Shuaa Capital is one of the Gulf Arab regions largest investment banks
By Reuters
Wed 14 Sep 2011 05:13 PM

Shuaa Capital has run the rule over at least two Egyptian brokerage
companies it considers potential acquisition candidates, as the investment bank
seeks to boost revenue amid a slump in its local UAE market, three sources said
on Wednesday.

Shuaa, which took companies such as ports operator DP World to market,
has looked at HC Securities and Beltone Financial, said two of the sources speaking
on condition of anonymity.

"They [Shuaa] do have some cash on their balance sheet from
previous asset disposals, and revenue-generating capabilities in the UAE are
limited," said one of the sources.

"Not that they are great in Egypt now but, if they can get a deal
done at a low price, it could be beneficial in the long term.

"You would expect some sort of stability to return to Egypt. The
question is if it is this year or next or after."

Shuaa, which has said it was looking for strategic assets, has been
relying on its own investment banking team and has not hired external banks for
the process, one of the sources said.

Talks are at initial stages, one source familiar with the matter said.

The sources did not want to be identified because the matter has not
been made public.

"We have been searching for suitable acquisitions and that is
ongoing," said a Shuaa spokesman in Dubai. "We want to play a major
consolidative role in the region.

"We have narrowed down our acquisition targets to a few and we have
appointed advisers on some of them."

The spokesman declined to identify potential targets. Officials at HC
Securities and Beltone were not available for comment.

Shuaa, one of the Gulf Arab region's largest investment banks, was hit
hard by the global financial downturn as impairments related to troubled assets
erased profits.

It has been shedding risky assets from its investment portfolio after
Dubai's property crash and asset bubble.

Its core brokerage and investment banking business has suffered amid a
slump in initial public offerings (IPOs) and muted trade volume in the United
Arab Emirates.

Shuaa is trying to take advantage of low valuations in the brokerage sector
in Egypt, the sources said.

The north African country saw violent political protests this year which
led to the suspension of its stock market and a sharp slump in valuations.

Shuaa posted a small second-quarter net profit in July, helped by
aggressive cost cuts and strength in asset management business.

It held around AED412m ($112m) cash and deposits as at June 30, mainly
from the sale of non-core assets.

Shuaa shares closed 1.9 percent lower on Wednesday. They have fallen 32
percent in the year to date.

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