Shuaa Capital swings to second-quarter loss amid rising expenses

Dubai investment bank's net operating loss widened to $8.9m

DFM-listed Shuaa Capital says it is well-positioned to capitalise on the UAE's economic growth. Jaime Puebla / The National

Dubai-based investment bank Shuaa Capital swung to a loss in the second quarter as expenses rose and its net operating loss widened.

Net loss attributable to owners of the parent for the three months to the end of June stood at Dh170m ($46.3m), compared with a profit of Dh29m reported during the same period last year, the company said on Thursday in a filing to the Dubai Financial Market, where its shares are traded.

Non-cash charges — the mark-to-market of managed funds, provisions and accelerated amortisation of intangible assets — affected the company's quarterly income.

Net operating loss for the reporting period widened to Dh32.6m ($8.9m), from Dh6.4m in the second quarter of 2021.

Operating expenses for the April to June period rose by about 19 per cent on an annual basis to more than Dh96m.

“Despite a challenging quarter, our core operating business remained resilient and delivered recurring revenues of Dh64m across all business units,” group chief executive Fawad Khan said.

“We have embarked on a group-wide exercise to streamline our business by addressing non-cash expenses and cost optimisation measures to position us for profitability in the future.”

The Dubai-based investment bank said it is well-positioned to capitalise on the UAE's economic growth.

The Arab world's second-largest economy, which made a strong rebound from the coronavirus-induced slowdown last year, has carried the growth momentum into this year, expanding 8.2 per cent on an annual basis in the first three months of this year.

The UAE and its Gulf neighbours are expected to run budget surpluses due to higher oil prices leading to excess capital being available for investment opportunities that will benefit companies such as Shuaa Capital.

Despite headwinds, revenue for Shuaa's asset management business stood at Dh33m, driven by the strong contribution from recurring management fees, which the company expects to increase further in the second half.

Despite a challenging quarter, our core operating business remained resilient and delivered recurring revenues of Dh64m across all business units

Fawad Khan,
group chief executive, Shuaa Capital

The group's investment banking unit reported Dh3m in revenue on lower advisory and trading revenue, compared with the first quarter.

The company did not give comparative year-on-year numbers for asset management and investment banking revenue.

Shuaa, which manages $14 billion in assets, has made several key transactions in recent quarters.

They include the listing of Anghami, the first Arab technology company on Nasdaq, through a special purpose acquisition company (Spac), the management of a $50m structured sukuk for UAE-based agriculture technology company Pure Harvest Smart Farms and the acquisition by its managed fund of Stanford Marine and Allianz Marine and Logistics Services Holding to create the world's fourth-largest operator of offshore support vessels.

Shuaa also unveiled a $100m initial public offering as the first of its three planned Spacs on Nasdaq New York in March.

Earlier this year, Shuaa said its wholly owned property subsidiary Northacre was shifting focus from prime central London to the UAE and wider GCC region to bring together the group’s real estate-related investment management, development management and asset management businesses under one platform.

Northacre will develop a portfolio of projects worth $3.6bn in the UK and the GCC, in addition to its property investment and asset management platforms.