Amlak Finance aims for return to DFM trading after six years

Amlak Finance shares are set to start trading again next month after an absence of six years.

The Sharia-compliant mortgage lender, which is 45 per cent owned by Emaar Properties, announced yesterday that it was aiming to have its stock readmitted to the Dubai Financial Market for restart of trading in April 2015.

Amlak, which yesterday reported a 22 per cent profit increase for last year, completed a restructuring of US$2.7 billion worth of debt last August, paving the way for the company’s shares, suspended since 2008, to resume trading.

The deal with 28 creditors broke the impasse that had hung over the UAE mortgage market since the height of the global financial crisis.

Amlak was an immediate casualty of the credit crunch in 2008 when it was unable to tap global credit markets to service its mortgage business. Protracted negotiations to merge Amlak with its rival mortgage lender Tamweel were finally aborted when the latter was taken over by Dubai Islamic Bank.

Reporting its financial accounts for the the first since 2008, Amlak said that profits for 2014 stood at Dh58.85 million, up from Dh48.23m the previous year, mostly driven by the loan restructuring.

By comparison the company, which has spent the past eight years slashing staff numbers and expenses but underwriting no new loans, reported net profits of Dh240m in 2008.

Total Assets fell to Dh7.3bn last year from almost Dh16bn in 2008.

The reduction included Dh6bn from amortization of the mortgage portfolio and almost Dh2.3bn from impairments losses recorded in 2014 on real estate and other corporate assets. With no new business to sustain it since 2008, revenues at the company also continued to decline.

Income from Islamic financing and investing assets fell 9.4 per cent to Dh368m last year from Dh406m a year earlier and fee income sank 69 per cent to Dh8.4m in 2014 from Dh27.8m in 2013. Amlak said that total revenues stood at just two-thirds of their 2008 level, while total operating expenses fell 45 per cent between 2008 and 2014 as the company implemented an austerity strategy for remaining staff.

“With the completion of the restructuring in November 2014, Amlak is now well placed to resume normal business operations and work towards creating future value for our shareholders once again,” said the Amlak vice chairman Ali Ibrahim Mohammed.

To win regulatory approval from the Securities and Commodities Authority to resume trading, Amlak must fulfil certain requirements including ratification by shareholders.

lbarnard@thenational.ae

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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.”

Amlak Finance aims for return to DFM trading after six years

Amlak completed a restructuring of US$2.7 billion worth of debt last August, paving the way for the company’s shares, suspended since 2008, to resume trading.

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