Dubai-based investment banking firm Shuaa Capital has reported FY 2016 revenues of AED 173.8 million (2015: AED 178.2 million).
Shuaa Capital has reported its results for the full year of 2016. Revenues stood at AED 173.8 million (2015: AED 178.2 million), while overall group losses were reduced by a 30.4% to reach AED 132.5 million (2015: AED 190.3 million).
Shuaa Capital’s (profile) asset management division reported a five-fold increase in profits, reflecting a strong year managing real estate funds and projects in Saudi Arabia and the United Arab Emirates. Its investment banking division also witnessed an active year advising on a series of mergers, acquisitions and general transactions for regional companies.
Shuaa Capital also acquired a 14 per cent stake in Bahrain’s Khaleeji Commercial Bank (profile) in December.
Incurred losses came predominantly from the group’s lending business Gulf Finance (profile), whereby provisions of AED 150.1 million were set aside against bad loans for the full year 2016. The lending division registered AED 110.0 million in losses compared to AED 119.9 million in 2015. In spite of this, the business reported full year revenues of AED 130.1 million (2015: AED 159.7 million).
Gulf Finance is currently undergoing extensive restructuring and re-positioning intended to boost performance and take advantage of a recovering SME sector. Demand for its Shariah-compliant financing products in Saudi Arabia continues to grow as the Kingdom’s various industries and sectors seek to establish and develop businesses further alongside the 2030 vision.
Jassim Alseddiqi (biography), Chairman of Shuaa Capital said, “We enter 2017 on a positive note. The company faced difficulties throughout the year. However, as the new board of directors take helm, we expect a turnaround year in 2017.
Our business lines capitalized on several opportunities during the year. We were part of a successful set of companies that co-launched Nasdaq Dubai’s Futures Market, having been the exclusive market markers. Our real estate hospitality funds and projects in Saudi Arabia and Dubai also received new interest as we handed over our first hotel in Saudi Arabia and participated in the launch of another one in Dubai.”
Shuaa Capital’s focus on providing logical solutions that help customers achieve their objectives on both institutional and individual levels, combined with rigorous cost control measures have helped the group maintain a solid client base and weather the turbulence. Operating expenses remained stable at AED 167.4 million (2015: AED 164.3 million) while general and administrative expenses for the year were reduced by a further 2.9 per cent, from AED 130.6 million to AED 126.8 million.
Shuaa Capital’s balance sheet and total assets at year-end stands at AED 1.3 billion (2015: AED 1.6 billion). The group’s liquidity position is strong with AED 346.6 million in cash. Liabilities decreased to AED 474.7 million from AED 638.6 million in 2015. As of 31 December 2016, net assets stood at AED 825.8 million while the leverage ratio was 0.45 at year-end.
Segmental Performance
Asset Management – Shuaa Capital Saudi Arabia
The Asset Management business reported a 492 per cent increase in full year profits to AED 8.3 million (2015: AED 1.4 million). Revenues were AED 27.4 million compared to AED 16.0 million in 2015. The division, which manages real estate hospitality funds and projects in addition to a series of discretionary portfolio management accounts, delivered a solid set of results thanks to its active presence in both the Saudi and Emirati markets. 2016 saw the launch of the Centro Shaheen by Rotana, a premium hotel in the Saudi city of Jeddah, as well as the announcement of the Cayan Cantara residential and commercial complex in Dubai, jointly with the Cayan Group and Rotana Hotel Management.
Capital Markets
The Capital Markets division reported a 38.1 per cent increase in revenues to AED 8.6 million (2015: AED 6.2 million), and a loss of AED 8.4 million (2015: AED 7.2 million). The division significantly expanded the team’s capabilities during the course of the year including a series of senior appointments in support of long term business objectives within the equities, credit and research teams. Key highlights by the team included Shuaa being the founding market maker for Nasdaq Dubai’s single stock Futures Market, and the Equity Research team expanding its coverage of various sectors and industries across the Gulf region.
Investment Banking
Shuaa’s investment banking division reported full year profits of AED 1.9 million compared to a loss of AED 1.9 million in 2015. Revenues increased by 17.4 per cent to AED 8.4 million (2015: AED 7.1 million). During the year, the division worked on a number of merger and acquisition and other general advisory transactions, including acting as an adviser to Emirates National Group on a strategic acquisition of a stake in Misr Bus, advising Amanat on the acquisition of a stake in Madaares, and advising Al Laith Group Investments on a strategic sale. The division continues to work on a number of M&A advisory and capital markets transactions for GCC based clients across a number of sectors. The investment banking team also maintains a strategic memorandum of understanding with Dubai SMEs, providing valuation advisory support to SME100 companies.
Lending
The lending business comprising Gulf Finance UAE and Gulf Finance Saudi Arabia reduced its losses for the year to AED 110.0 million, from AED 119.9 million in 2015. Revenues for the lending business were 18.5 per cent lower at AED 130.1 million (2015: AED 159.7 million). The division continued to set aside provisions against bad loans due to continued weakness in the SME sector. Gulf Finance Saudi Arabia, which offers Sharia compliant financing solutions to SMEs in the Kingdom, has continued to see stable growth fueled by strong demand from the Saudi SME market.
At year end, the size of the Gulf Finance UAE and Gulf Finance Saudi Arabia loan portfolios were AED 500 million and AED 189 million respectively, compared to AED 925 million and AED 193 million in 2015. Gulf Finance maintains a diversified exposure to sectors such as manufacturing, trade, healthcare, transport and logistics.
Corporate
Shuaa Capital’s corporate division which is the backbone of the client-facing business divisions recorded revenues of AED 8.8 million (2015: AED 1.2 million), before losses on investments in Shuaa-managed funds worth AED 9.5 million (2015: AED 12.0 million). General and administrative expenses decreased to AED 33.0 million (2015: AED 34.6 million) as the company continues to consolidate and optimize back office operations. The division reported a reduction in full year losses to AED 24.3 million (2015: AED 62.6 million).