Abu Dhabi’s ADFG to buy 48.3% of Dubai’s Shuaa Capital

Alternative investment firm Abu Dhabi Financial Group, Dubai-based Arqaam Capital and Al Mal Capital were among the bidders for Dubai Banking Group’s stake in Shuaa.

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Dubai Banking Group, the biggest shareholder in Shuaa Capital, said yesterday that it has agreed to sell a 48.3 per cent stake in the Dubai-based investment bank to Abu Dhabi Financial Group (ADFG).

The banking group’s parent company, Dubai Group, had been under pressure to sell the stake in Shuaa, as well as other assets, to pay back debt to the French bank Natixis.

Dubai Banking Group did not disclose the amount it was sold for, but Shuaa Capital currently has a market capitalisation of Dh745.5 million, making the stake that was sold worth roughly Dh360m. Shares of Shuaa rallied 5.7 per cent to 70 fils.

“The sale of Dubai Banking Group’s stake in Shuaa is in line with Dubai Group’s restructuring agreement,” said Fadel Al Ali, the chairman of Dubai Group.

“We have been a proud partner in Shuaa Capital over the years and we are pleased to have found in ADFG a strong, strategic partner to support Shuaa’s future development and long-term growth prospects.”

Shuaa declined to comment beyond what was said in the brief regulatory filing on the Dubai stock exchange, while Natixis did not immediately reply to an email seeking comment. Officials at Abu Dhabi Financial Group were not available to comment.

Mr Ali told Reuters late last month that Dubai Group was also selling its stake in the Egyptian investment bank EFG Hermes Holding and Bank Muscat as part of its restructuring plan. Dubai Group reached an agreement in 2014 with its creditors to restructure US$10 billion of debt, extending deadlines for repayment to the end of this year and the end of 2024. The recent economic slowdown has made it difficult for many companies to repay debt.

Natixis, according to Bloomberg, had the option to sell the stakes if Dubai Group had not repaid the loan by the end of March. The asset that Dubai Group is seeking to divest back is a $1.1bn debt owed to Natixis.

Shuaa’s first-quarter loss widened to Dh27.5m, compared with a net loss of Dh1.6m in a year-earlier period.


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