Thursday, Sep 15, 2011
--Shuaa says in talks with number of Mena region acquisition targets
--Shuaa sees major consolidator role in the region
--Wants to use strong balance sheet, solid cash position to invest in organic and inorganic growth.
(Recasts. Adds details, background throughout.)
DUBAI (Zawya Dow Jones)--After a turbulent two years of downsizing and restructuring, Dubai-based investment bank Shuaa Capital is back on the acquisition path, saying Thursday it's in talks with a number of possible targets in the Middle East North Africa, or Mena, region and sees a leading role for itself in any industry consolidation.
"Negotiations are at different stages and may or may not result in one or more acquisition," Shuaa said in a brief statement posted on the Dubai Financial Market's website. "Shuaa Capital believes that the current economic environment provides an opportune time for it to play a major consolidator role in the region." It didn't identify any specific acquisition targets.
Shuaa Capital suffered heavy losses in 2009 as a result of the financial crisis that caused Dubai's property crash and asset bubble burst, and has been shedding risky assets from its investment portfolio since. The company returned to profit in the second quarter this year, making a net profit of 600,000 dirhams ($163,000) compared to a net loss of AED56.6 million a year earlier.
Shuaa's renewed appetite for acquisitions is timely as declining stockmarket activity has seen a number of the region's brokerages close shop, or suspend operations, while numerous other asset managers have been forced to scale back operations as revenues dried up.
Mideast financial markets, with a combined stock market capitalization of around $900 billion, have been hurt badly by regional uprisings this year that toppled the governments in Egypt and Tunisia, and sparked a civil war in Libya and ongoing violent unrest in Syria and Yemen. More recently, regional stock markets were also affected by ongoing debt troubles in Europe and the downgrade of the U.S. by ratings agency Standard & Poor's.
Shuaa has made a concerted effort over recent years to overhaul its business, reshuffle its management and cut jobs in a bid to bring down costs and become profitable again. One continued bright spot for the company however has been the performance of its asset management arm which continues to increases assets under management.
"Shuaa Capital has outlined in previous statements to the market that it intends to use its strong balance sheet and solid cash position to invest in organic and inorganic growth," Shuaa said Thursday.
The investment bank's shares closed trading Wednesday down 1.9% at AED0.83.
-By Tim Falconer, Dow Jones Newswires; +9714 446-1690; tim.falconer@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
15-09-11 0524GMT
