SHUAA Capital psc (DFM: SHUAA), the leading asset management and investment banking platform in the region created by the merger of SHUAA Capital and Abu Dhabi Financial Group (ADFG), secured board approval of the company strategy for 2020 and the audited financial statements for the fiscal year ending 31 December 2019.
SHUAA’s audited annual results for 2019 highlighted the company’s solid financial performance and ability to sustain revenues and capitalize on growth opportunities, despite the focus on merger and integration activity as well as challenging market conditions and geopolitical uncertainty. The company reported an EBITDA of AED 186 million and a net profit to shareholders of SHUAA Capital of AED 47 million by 31 December 2019.
The consolidated financial results for 2019 showed the immediate positive outcome of the merger between the two entities (ADFG and SHUAA), with the company expecting to realize merger synergies amounting to a run rate of AED 50 million per annum by Q2 2021.
Sustainable and ongoing growth
Following the creation of a financial powerhouse, SHUAA’s key focus in 2019 was to strengthen its position as a leading regional asset management and investment banking platform.
The company’s asset management business maintained its growth trajectory, with assets under management reaching US$ 14 billion in 2019, up 15% year-on-year. Furthermore, SHUAA’s investment banking business continued to be one of the most active in the region. The company played a key role in the regional Sukuk (Shari’a-compliant bond) market as a mandate lead arranger for over US$ 500 million of Sukuk issuances and provided strategic advisory services to an extended client base.
The company also achieved a 28% reduction in non-core assets in 2019 mainly through the sale of its brokerage arm (SHUAA Securities) and exit of equities market-making business for a total deal value of c. AED 100 million.
Medium-term strategy put in place
Backed by a profitable year and strong fundamentals for sustainable growth, the company has set clear goals for 2020, supported by its board of directors: accelerating growth through further integration and synergies between the two combined entities, as well as strengthening SHUAA’s profitability through recurring revenues.
Growth, diversification and scale
With these goals in place, SHUAA is pursuing the following strategies in 2020:
a) To access new revenue pools by expanding our investment banking franchise, growing our asset management business and enlarging our regional footprint resulting in the strengthening and expansion of our core businesses.
b) To increase recurring income by engineering new products, growing both permanent capital vehicles and our fixed income platform resulting in a diversified product and service offering across our core businesses.
c) To increase profitability and strengthen control by digitizing the company, optimizing our balance sheet structure, and increasing operational efficiency.
SHUAA intends this strategy to maintain its growth trajectory in the medium to longer term and deliver long-term value for its shareholders while increasing assets under management to US$ 20 billion.
Fadhel Alali, Chairman of SHUAA Capital psc, said: “I am proud of what our leading entity achieved in 2019, and I thank our board of directors and distinguished shareholders for their trust and continued support. We successfully completed a transformational merger, adding another historical milestone to the rich legacy of SHUAA and setting a benchmark for 2020 and onward. While operating under a new vision and strategy, we have confidence in the management capability to deliver. Full integration will enable us to leverage SHUAA’s asset management and investment banking capabilities and realize our ambitious growth targets for 2020 and beyond.”
Jassim Alseddiqi, Chief Executive Officer of SHUAA Capital psc, said: “This well-defined strategy sets the foundation for significant and sustainable growth, despite market challenges resulting from COVID-19 and falling oil prices. We have always been pioneers in exploring and creating profitable opportunities amid challenging times. Our strategic plans, ambition and talent will enable us to strengthen our position as a leading regional investment manager, achieve regional dominance in investment banking and solidify our innovation leadership. Our track record of creating value for our clients, employees and shareholders makes us confident in our ability to maintain profitability and achieve our medium-term growth targets. We thank our board for their faith in us as we continue to deliver long-term value for shareholders.”
The strategy announcement coincided with board approval of SHUAA’s audited results for the fiscal year ending 31 December 2019.