Shuaa reports Dh31.6m loss in second quarter

Investment bank's profit dented by higher merger costs and impairments on legacy investments

A subsidiary of Dubai listed Shuaa Capital will be managing an investment portfolio of assets worth $400 million. Jaime Puebla/The National

Dubai investment bank Shuaa Capital swung to a loss in the second quarter before its recent reverse takeover by Abu Dhabi Financial Group.

The company's loss attributable to shareholders reached Dh31.6 million in the three months to June 30, compared with a profit of Dh14.6m in the same period last year, despite revenue increasing by 54 per cent to Dh47.5m.

Shuaa Capital's bottom line was dented by higher general and administrative expenses which were up 46 per cent, increased finance costs up 120 per cent and by a Dh10m provision against impairments. For the six-month period, the company declared a loss of Dh56.5m, compared to a profit of Dh26.3m in the same period last year despite revenue increasing by 61 per cent to Dh102.9m. Provisions for impairments for the half-year period stood at Dh18.3m.

"Shuaa's final set of quarterly earnings reflect the completion of expenses and provisions relating to the merger as well as legacy investments," said the company's chief executive, Fawad Tariq-Khan.

"More importantly, our operating lines continue to grow in revenue and these will continue to serve as crucial elements for the new and enlarged entity well into the future. Following completion of the merger, the various teams at Shuaa and ADFG are now investing considerable joint efforts building a solid long-term road map for this newly created regional financial powerhouse," he said.

The reverse takeover of Shuaa by Abu Dhabi Financial Group was approved by Shuaa shareholders last month. The deal creates a group with $12.8 billion of assets under management, of which $11.5bn is being brought by ADFG. Shareholders of ADFG will receive 58 per cent of the shares in the combined entity, with existing Shuaa shareholders taking the remaining 42 per cent. The new entity will have 380 staff and operate in seven countries, serving 12,500 customers.

Shuaa is also convening a shareholders' meeting to amend the company's articles of association, increase the number of board members to seven from five, approve a name change of the combined entity to ADFG and to approve the appointment of Masood Mahmood to its board. Mr Mahmood is currently chief executive of Abu Dhabi satellite company Yahsat.

In a separate announcement, the company said it had successfully arranged a $135m sukuk for Dubai developer The First Group on the London Stock Exchange.