Dubai: The asset management company Shuaa Capital managed a Dh5 million attributable net profit for first-half 2020 in what has been an exceptionally difficult trading environment.
If mark-to-market losses on portfolio investments are discounted, Shuaa’s net profit would have been Dh164 million, while EBITDA (earnings before interest, tax, depreciation, amortisation) would have swelled to Dh284 million.
In the first-half 2019, the asset management company reported a loss of Dh56.5 million.
“Whilst COVID-19 as well as the economic and geopolitical challenges will continue to impact overall business and market activity for some time, our business model is calibrated around seizing opportunities across economic cycles, geographies and products,” said Jassim Alseddiqi, CEO.
“Our pipeline of investment banking mandates has strengthened, and the launch of scalable new investment funds has commenced.”
Merger’s paying off
Cost benefits are also streaming in from last year’s merger with ADFG. In the year to end June, Shuaa attained 48 per cent of its Dh55 million target (revised from Dh50 million) in synergies by end 2021.
There was also downsizing of “non-strategic assets”, through a 38 per cent reduction in non-core asset unit since July 2019 to date. This in turn freed up Dh128 million from the exits.
Our pipeline of investment banking mandates has strengthened
The asset management business was at $13 billion at the end of June, from $12.8 billion in the first quarter, with the company working on its recurring revenue streams “through permanent capital vehicles”.
The investment banking business remains focused on “capital raising and restructuring mandates”, while building on the fixed-income trading desk. In the first six months, it was the lead or co-lead arranger in transactions of over $500 million, while executing fixed-income flow of $1.5 billion plus (from a 20 per cent year-on-year growth).
“The investment bank’s model remains resilient despite periods of crisis and uncertainty and is actively involved in capital restructuring and raising mandates in excess of $2 billion,” Shuaa said in the statement.
The first-half has been quite a trying phase for the region's investment banking heavyweights, with Investcorp and Waha Capital slipping into the red. It was the same at Emirates Investment Bank and Al Ramz.