Dubai investment banking firm Shuaa Capital launched a $200 million fund, further expanding its asset management platform and product offering to investors.
The fund targeting special situations across Gulf countries has already attracted a total of $68m in commitments from investors, Shuaa said in a statement on Sunday to the Dubai Financial Market, where its shares trade.
Shuaa Financing Opportunities Fund is the fourth investment vehicle rolled out by the company this year. The asset management firm has raised more than $140m in the past three months from investors, it said.
The latest fund is Shuaa’s first dedicated financing vehicle. The closed-ended fund with a four-year tenor will target investments in senior, mezzanine and uni-tranche Sharia-compliant financing for corporates and developers operating in the GCC.
"Against the backdrop of a changing regulatory and business environment, several project deals and assets in liquidity-hit sectors are unable to progress or fulfil certain obligations, particularly due to the challenges posed by Covid-19,” Jassim Alseddiqi, chief executive of Shuaa, said.
“Despite the challenging market conditions for borrowers, Shuaa believes that there are attractive opportunities in the GCC market that will generate appropriate risk-adjusted returns for its investors, in key sectors including healthcare, real estate, hospitality, construction and shipping.”
Opportunities in the current market environment include requirements for short-term recapitalisations, growth capital, bridge loans and acquisition financing, he said.
The company’s investment team has already identified several opportunities in the region to provide last-mile funding for projects.
“We look forward to jump-starting these key projects towards their successful completion and continuing to support their future goals as our economy moves into a recovery phase," Mr Alseddiqi said.
Earlier this month, Shuaa launched three Sharia-compliant, open-ended funds with initial investment commitments of $75m. The funds, targeting qualified institutional investors, were launched through the company's wholly owned subsidiary, Shuaa GMC, which is regulated by the ADGM Financial Services Regulatory Authority, it said in a statement at the time.
The three funds – Shuaa High Yield Sukuk Fund, Nujoom Aggressive Fund and Nujoom Balanced Fund – are part of Shuaa’s platform rolled out in Abu Dhabi’s international financial hub.
Shuaa manages $13 billion in assets and plans to expand its investment banking and asset management businesses to boost AUMS to $20bn.
The company’s expansion strategy involves growing its regional footprint as it looks to boost recurring income through new products, permanent capital vehicles and expanding its fixed income business, Shuaa said in March.
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Just as McDonald’s has the Big Mac, Jollibee has Spicy Chickenjoy – a piece of fried chicken that’s crispy and spicy on the outside and comes with a side of spaghetti, all covered in tomato sauce and topped with sausage slices and ground beef. It sounds like a recipe that a child would come up with, but perhaps that’s the point – a flavourbomb combination of cheap comfort foods. Chickenjoy is Jollibee’s best-selling product in every country in which it has a presence.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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