Dubai’s Shuaa Capital reports fourth consecutive profit rise

Net profit in the first quarter increased to Dh8.2 million from a loss of Dh5.9m in the same period the previous year.

Sheikh Maktoum Hasher Al Maktoum, the executive chairman of Shuaa Capital, said the rise in interest among companies going public should improve the possibility of more transactions being executed by the company. Jaime Puebla / The NationalShow less

Shuaa Capital, Dubai's oldest investment bank, reported a fourth consecutive quarterly profit amid a rebound in capital markets.

Net profit increased to Dh8.2 million from a loss of Dh5.9m in the same period the previous year, it said. Revenues increased 77 per cent to Dh64m as net fees and commissions advanced 135 per cent to Dh15.8m from Dh6.7m. Shuaa released its unaudited first quarter results on April 13.

“We are seeing an improved investment banking pipeline and a larger pool of companies wanting to go public, improving the possibility of more transactions being executed by Shuaa,” said Sheikh Maktoum bin Hasher Al Maktoum, the executive chairman of Shuaa Capital. “We have further expanded our loan portfolio, completed a number of significant investment banking transactions, improved asset quality while ensuring that we build our competitive market position.”

Dubai’s main benchmark more than doubled last year amid a turnaround in the UAE’s economy that has also pumped up property prices. Dubai’s measure has gained 53 per cent this year, making it the world’s best performing index. Other benchmarks in the region have also posted double-digit advances this year.

Those gains bolstered profits at Shuaa’s asset management unit, with its net profit increasing 65 per cent to Dh3.1m from Dh1.9m a year earlier. Shuaa’s flagship Emirates Gateway Fund generated 17.3 per cent over the first quarter, outperforming its benchmark. Its Arab Gateway Fund returned 9.6 per cent over the quarter in line with its benchmark as regional equities outpaced international markets amid the Gulf’s economic boom.

While many businesses in the country have shied away from public offerings in recent years, the stellar performance of stock indexes in 2013 has made many companies reconsider amid rising valuations, bankers say.

Shuaa’s investment banking division had revenues of Dh6.4m in the first quarter and a profit of Dh8m after a loss of Dh900,000 in the same period the previous year. During the quarter the firm’s investment banking team worked on transactions including the execution and placement of the initial public offering of Emirates Reit.

Shuaa Capital said in March it had been mandated to run the initial public offering of Able Logistics Group, a freight forwarding, land transport and warehousing services company.

The Dubai investment bank will be the exclusive financial adviser, lead manager and book runner for the issue, which will list on the Dubai Financial Market this year. Able is co-owned by GrowthGate Capital, a GCC-based buyout firm.

Elsewhere, Shuaa’s lending arm posted a 47 per cent year-on-year quarterly increase in revenues to Dh30.8m. Sheikh Maktoum said he expected a rise in demand for loans from SMEs after the UAE decreed that 10 per cent of all government contracts must be awarded to this segment.

Separately, according to Bloomberg News, Sheikh Maktoum said in Dubai yesterday that Shuaa plans to raise Dh200m to Dh300m in the form of a loan, sukuk or bond. Shuaa is targeting Dh1.2bn loan book by year-end versus Dh824m in the first quarter, Bloomberg said, citing Sheikh Maktoum.

The stock dropped 1.2 per cent to Dh1.60, paring its year to date gain to 55 per cent.

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