Slump in IPO activity hits Shuaa Capital's earnings

Dubai: A decline in regional IPO (initial public offering) activity wiped Dh100 million off the annual net profit of Shuaa Capital, the UAE's largest investment bank by market value, the company said in an emailed statement.

The company's net profit for the financial year ending March 2007 dipped 27 per cent to Dh262 million from Dh362 million the previous year.

Shuaa officials blamed "much lower" performance fees after three years of strong gains in the GCC and Arab equity markets, as well as declining trading volumes. "In the case of our asset management business, the primary markets of focus have been trading around the flat line for most of the second half of 2006, resulting in a decline in performance fees generated by this business," chief operating officer, Karim Mitri, said in a statement.

"However, our assets under management grew as a result of many new institutional investors that are now eager to enter these markets due to the attractive valuations of the blue chips and the recent reforms introduced in the GCC markets."

A 39 per cent increase in costs to Dh85 million also dented the company's results. A 30 per cent increase in headcount was blamed too.

The company's revenues for the financial year were down 8.4 per cent to Dh459 million compared to Dh501 million in 2005 financial year.

The return on shareholder equity was 19 per cent in the 2006 financial year.