Fawad Tariq Khan, CEO of Shuaa Capital Image Credit: Atiq ur Rehman/Gulf News

Dubai: Shuaa Capital, the Dubai-based financial services firm, is targeting a profit in excess of Dh100 million in 2018, and expects that to be driven by its investment banking and capital markets businesses, according to Fawad Tariq Khan, chief executive officer of Shuaa.

The company is also planning additional expansion across the region this year along with acquisitions, particularly in the UAE, Saudi Arabia, and Egypt.

Shuaa reported Dh74 million in net profit for 2017, a turnaround from the Dh132.5 million loss recorded in 2016, with the figure representing the highest full-year profit since 2007.

“If I look at where the business can grow, it [Dh100-million-plus in profit] is a reasonable target; it’s a stretch target. Despite market conditions, we have to grow our way out of this,” Khan said in an interview with Gulf News.

To reach that profit target, Shuaa is also planning to grow its assets under management from the current Dh4 billion to an excess of Dh5 billion in the next few months.

Turnaround strategy

Shuaa’s turnaround last year came after Abu Dhabi Financial Group (ADFG) took a 48 per cent stake in the business in December 2016 and appointed a new board of directors to implement a new strategy.

As part of that strategy, Shuaa is exiting all its non-core business. In 2017, around Dh50 million in cash proceeds were realised as a result of exiting some business, with the company re-investing that cash.

In 2018, Shuaa expects to see another Dh50 million to Dh100 million in cash proceeds as it exits more non-core assets.

“It’s a continuing programme — we still have a bunch of non-core assets that we’re looking to exit this year. I think it’ll take another six to nine months, so we’re talking about 2018,” Khan said.

Shuaa plans to focus on its core businesses of investment banking, asset management, capital markets, and credit in 2018. Within those, the CEO believes the derivatives market offers strong opportunity for Shuaa to grow.

The company already provides market making activities on futures indices on Nasdaq Dubai, and liquidity provision services on Real Estate Investment Trusts (REITs) and is planning to grow its operations in those segments.

“If you look at the volumes [of trade on single-stock futures], they’re increasing month-on-month, in some cases 20-30 per cent every month. If you look at all the developed markets, the derivatives markets overtook cash equities by volumes,” the CEO said.

Shuaa currently has a market share of above 45 per cent of the derivatives market on Nasdaq Dubai, Khan said, and is growing its position in that segment. The CEO said he was bullish on GCC’s equity markets.

Acquisitions

Away from financial markets, Shuaa is eying more acquisitions this year. It is currently in the process of acquiring Kuwait-based Amwal International Investment, and is aiming to make that acquisition in March or April of this year.

Khan declined to disclose the value of the deal, but said the company is now working to obtain regulatory approval, after which it will open a public tender to other shareholders.

“What we’ve said is in order for a transaction to proceed, I want to collect at least 75 per cent of the shares. I don’t see any reason to de-list it at the moment because it’s a listed vehicle on the Kuwait bourse, which in itself is interesting,” he said.

Within Amwal, Khan said the “crown jewel” was its 51 per cent stake in Noor Capital Management, a top online trading broker in Kuwait.

Elsewhere in the GCC, Shuaa is planning to grow its operations in Saudi Arabia where it sees opportunities amid reforms in the kingdom. The expected inclusion of the main Saudi stock index on the MSCI emerging market index is also expected to drive flows into the market.

The company, which launched its brokerage business in Egypt last week, is also currently in talks with two companies in Egypt for potential acquisitions, but is still unclear on whether those will be finalised. Shuaa is planning to expand in asset management and investment banking in the north African country.