Shuaa Capital is having a busy time of it from a series of back-to-back deal-making. Image Credit: WAM

Dubai: Abu Dhabi based asset management firm Eshraq Investments is taking full ownership of Goldilocks Investment Company Ltd. in a transaction with Dubai’s Shuaa Capital.

The latter currently manages Goldilocks through a subsidiary, Shuaa GMC Ltd.. After the acquisition, Eshraq Investments will have combined assets of more than Dh3.8 billion ($ 1.03 billion).

A statement issued by Eshraq Investments said: “The proposed transaction is a win-win for both Eshraq and Goldilocks’ shareholders, particularly in terms of investment portfolio diversification and increased liquidity. Most importantly, the acquisition of a high-performing fund like Goldilocks will enable Eshraq to increase its profitability, improve its share price and positions the company for strong business performance, while creating tangible and long-term sustainable value for Eshraq shareholders.

“We also expect the transaction to give us access to profitable deal flow at an early stage.”

New shares in exchange

Under the terms, Eshraq will issue new shares to existing Goldilocks investors in exchange for their stake in the Fund. The transaction values Eshraq at 40.6 fils per share, a 37.8 per cent premium to Eshraq’s closing price on March 28.

The non-cash transaction has already bagged the approval of the regulator, the Securities and Commodities Authority, and Eshraq’s Board of Directors. (The transaction is subject to the approval of Eshraq’s shareholders and other customary regulatory approvals.)

‘Opportunistic’ investments

Goldilocks operates on an ‘opportunistic long-term investment strategy’, and has generated a net return of 243 per cent since inception and 76 per cent returns in 2021 through direct investments in equities and “other undervalued and mispriced opportunities”.

Goldilocks generated a Dh105 million income in 2021 from investments in “profitable and strong cashflow generating UAE-based companies”.

Makes sense

The Goldilocks fund has stakes in the Arabic music streaming platform Anghami (now listed on Nasdaq New York), India’s education app Byju’s and Dubai’s Stanford Marine Group. There are also exposures in listed entities such as Dana Gas, GFH Financial Group and Takaful Emarat, among others.

Solid 2021 numbers
Eshraq Investments reported a net profit of Dh38.4 million. It generated an operating income of Dh26.2 million, up 45% from 2020, led by its leasing and hospitality businesses. There was a profit of Dh46.1 million from its financial and technology investments, driven by the equities and fixed-income portfolio and a 44% year-on-year increase in dividend income.

In the statement, Shuaa said that Goldilocks’ portfolio companies have delivered “demonstrated strong business fundamentals and effective management”. There are also 15 underlying investments with assets valued at Dh2.1 billion for the purpose of the transaction.