Dubai investment banking firm Shuaa Capital bought out Dh1.13 billion ($308 million) of debt owed by Stanford Marine Group, and looks to close at least two more debt buyout transaction this year, its chief executive said.
Shuaa has taken 100 per cent ownership of the offshore marine services firm, as it bought debt held by five local and two international lenders at a discount, Jassim Alseddiqi told The National in a phone interview, declining to give further details.
"Shuaa and its consortium bought out 100 per cent of the Stanford Marine Group debt and with that we became the owners of the business," he said.
The transaction allows for a restructuring of the liabilities, saving more than 1,800 jobs and supporting almost $20m of exports of UAE-made ships every year, Shuaa said in a statement to the Dubai Financial Market, where its shares trade.
It also strengthens SMG's liquidity position and puts it on a path back towards growth as the hydrocarbon industry continues to recover from the pandemic-driven slowdown. The company is now profitable based on its new capital structure, Mr Alseddiqi said.
“We believe this to be one of the few restructuring transactions in recent times to successfully address all stakeholder needs and we hope that this will serve as a template for further such transactions,” he said in the bourse filing.
SMG builds vessels for the oil and gas industry at its Grandweld shipyard facility in Dubai Maritime City, where it also carries out ship repairs. The company also operates its own fleet of vessels serving the oil and gas industry. It had previously been owned by private equity firm Abraaj Group, which was placed into liquidation in 2019.
SMG had sought to restructure its debt or extend maturities following a slump in the hydrocarbon sector.
The deal has allowed banks to “exit a distressed debt situation with a cash recovery” and ensured the “continuity of SMG and its contribution to the local economy”, he said.
This investment is being carried out through Shuaa’s private markets platform and is held as a co-investment vehicle, the company said. The deal is expected to generate management and performance fee income, as well as an expected return on its principal investment, it added.
SMG's fleet of offshore vessels operate across the Middle East, South-East Asia and West Africa. With its headquarters in Dubai, the company has offices in Abu Dhabi, Saudi Arabia, Singapore and Malaysia.
“Shuaa Capital has managed to pull off a complex restructuring programme effectively giving the company a new lease of life,” Elias Nassif, chief executive of SMG, said.
“We are excited and hopeful of our future growth under the direction of a world-class management team and with the strong support of our employees and shareholders.”
Shuaa has launched several funds in recent months and made investment deals as it continues to grow its assets under management.
The company plans to close three deals through its funds and another three investment banking transactions this year. It will primarily focus on the technology sector, Mr Alseddiqi said.
"You should anticipate more tech [sector] transactions this year," he said. "We are continuously on the lookout."
The company also plans to launch more funds this year and grow investments into recently-launched funds.
In October, the company launched a $200m fund targeting investments in special situations across Gulf countries. The Shuaa Financing Opportunities Fund was the fourth investment vehicle rolled out by the firm in 2020.
In November, alongside financial advisory firm Arton Capital, Shuaa launched a €100m (Dh436m) real estate investment fund targeting property investments linked to a second residency or citizenship programme.
Shuaa, which sold its brokerage and market-making businesses last year, has a target to sell most of its non-core assets by the end of this year, Mr Alseddiqi said.
The company ended 2020 with $14bn in assets and plans to boost its AUM to $20bn through the expansion of its investment banking and asset management businesses by 2025 – a goal Mr Alseddiqi says remains achievable despite the disruption caused by the pandemic last year.
“In a Covid-19 year … the worst year historically for financial services firms, our AUMs have grown through launching of new funds," he said. "If that is the case in a very difficult year, the subsequent years will be much better and [help] us achieve our target.”