Shuaa Capital nears merger with Abu Dhabi's ADFG

Shuaa chairman resigns from the board to take on the group chief executive position in the combined entity

Shuaa Capital increased assets under management to $14bn by the end of 2019. Jaime Puebla / The National
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Shuaa Capital is close to finalising a merger with its largest shareholder Abu Dhabi Financial Group, as the Dubai-listed investment bank rearranges its board to run the combined entity.

“The potential transaction with ADFG is progressing through the final stages before the regulatory and shareholders’ approval will be granted,” Shuaa said on Monday in a filing to the Dubai Financial Market, where its shares trade. It did not specify when it expects the deal to be concluded.

Shuaa chairman, Jassim Alseddiqi, who is also the managing director and chief executive of ADFG resigned from the investment bank's board. He is expected to hold the position of group chief executive of the combined entity “should the transaction conclude”, Shuaa said.

Fadhel Al Ali will replace Mr Alseddiqi on Shuaa's board, the bank added.

In March, Shuaa said it had initiated talks with ADFG for a merger and both companies set up working groups of senior executives to review the commercial potential of the tie-up.

Swiss bank UBS is advising Shuaa, which also hired law firm Linklaters as legal adviser on the transaction, a person familiar with the matter told The National in March. ADFG, an alternative investment company with $20 billion (Dh73.46bn) of assets under management, has recruited US lender JP Morgan and law firm Herbert Smith to work on the deal.

ADFG bought a 48.36 per cent stake in Shuaa in 2016 and formed a strategy to turn around the struggling investment bank, which fell on hard times following the 2008 financial crisis. The plan focused on growing assets under management, leveraging its balance sheet and expanding its business in Saudi Arabia and Egypt.

In May, Shuaa swung to a first-quarter loss due to legacy provisions for its exposure to the now defunct private equity company Abraaj.