Shuaa reports AED59 mn Q3 profit

Assets under management grows to $13.6 bn (AED50 bn)

Amit Chettupuzha

DUBAI/November 12-2020: Shuaa Capital, the leading asset management and investment banking platform in the region has reported a net profit of AED59 million for the third quarter ending September 30, 2020.

The Group also saw continued strong EBITDA generation with Q3-2020 EBITDA standing at AED114 million. The company said this performance was primarily driven by positive mark-to-market effects on investment portfolio despite a proactive negative valuation adjustment.

Asset management

Shuaa’s asset management business maintained its solid base and positive trajectory, with assets under management increasing to $13.6 billion (AED49.91 billion) at the end of Q3-2020 compared with $13 billion (AED47.71 billion) in Q2-2020, driven by net new money, market performance and FX gains.

Integration targets

With post-merger systems and organisational integration on track, Shuaa has realised 55 per cent of its previously set synergies target to be achieved by end 2021, and this translates to AED30 million out of the AED55 million target. Additionally, the company continues to downsize its non-strategic assets, achieving a 39 per cent reduction in its non-core asset unit (NCU) since July 2019 to date, and remains on track to close the unit by end of 2021.

Core businesses

The company has made further headway in strengthening and growing its core businesses as well as diversifying its product and service offering within these core businesses.

This has been an active quarter which saw Shuaa launch new funds demonstrating clear progress on its plan to increase recurring revenue streams through permanent capital vehicles.

Capital vehicles

These include the Shuaa Financing Opportunities Fund, which is not only Shuaa’s first dedicated financing fund but also the company’s first fund focused on private Sharia-compliant financing in the GCC.

The fund achieved first close on September 29, 2020 with $68 million in commitments from investors. In addition, shortly after the period end on October 4, Shuaa launched three Sharia-compliant funds, the first such funds within an ICC umbrella to launch on the Abu Dhabi Global Market (ADGM), with $75 million in commitments received.

These products build on SHUAA’s track record of creating innovative investment opportunities for its clients, and further support its commitment to the Islamic investment industry where the company sees strong investor appetite.

Balance sheet and funding

Shuaa recently completed the issue of a new bond, which marks the first high yield issuance in the MENA region since the onset of COVID-19 in March 2020, raising $150 million.

The bond was admitted to trading on the London Stock Exchange’s International Securities Market on October 28, 2020 and attracted significant institutional interest across the region and beyond, allowing Shuaa to raise the targeted $150 million.

The bond issue represents a further milestone in executing on the company’s strategic levers by fortifying its balance sheet and strengthening its financial position going forward.

Jassim Alseddiqi, (seen in the picture) Chief Executive Officer of Shuaa Capital, said that with a resilient business model in place and a clear strategy to achieve long-term sustainable growth, Shuaa has continued to achieve significant progress in Q3-2020.

“It is once again testament to our team that despite the considerable on-going challenges of the current pandemic, we have been able to achieve so much, both operationally – with the successful launch of our new funds in recent months – and financially, strengthening our balance sheet and increasing our earnings visibility going forward,” Alseddiqi said.

 

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