Stock - Shuaa new
Shuaa is aiming for a Northacre-sized comeback in the next six months. Real estate operations under its UK property company will see Shuaa take on multiple projects. Image Credit: Supplied

Dubai: Lower trading revenues from its investment banking division dented Shuaa Capital’s second quarter numbers, with net operating income at Dh6 million against Dh24 million in the first three months of the year. It resulted in a net loss of Dh170 million in the April-June period against a net income of Dh6 million in the first.

In the first six months, Shuaa recorded losses of Dh192.55 million against a profit of Dh68.19 million a year ago. Losses sustained during the second quarter was particularly severe at Dh143.91 million.

“Non-cash expenses (mark-to-market of Shuaa managed funds, accrued expenses, and accelerated amortization of intangible assets) contributed to results,” said a statement.

Shuaa reckons that much of the bad news has already been reflected in its financials. It cites reasons for a more solid second-half:

  • The group’s investment banking business had revenues of Dh3 million due to lower advisory and trading revenues compared to the first quarter. “But given a favorable deal pipeline, revenues in the second half of the year are expected to be higher,” Shuaa said.
  • As part of the global expansion of Shuaa’s wholly owned subsidiary, Northacre, a ‘separate new entity based in London has been established to bring together the group’s real estate-related investment management, development management and asset management businesses under one platform’. Northacre will develop a portfolio valued at $3.6 billion in the UK and the GCC, in addition to its real estate investment and asset management platforms.
  • Revenues from the corporate segment remained strong at Dh28 million despite increased market volatility.
  • The cost-income ratio of 90 per cent in Q2 2022 is higher than the 73 per cent in Q1-2022 due to lower revenues. “However, additional cost optimization measures are expected to have an impact in the second-half of 2022’.
  • The group will focus on deleveraging with repayments of Dh188 million in H1-2022.

“Despite a challenging quarter, our core operating business remained resilient and delivered recurring revenues of Dh64 million across all business units,” said Fawad Tariq Khan, Group CEO. “We have embarked on a Group-wide exercise to streamline our business by addressing non-cash expenses and cost optimization measures to position us for profitability in the future. We remain committed to providing innovative investment solutions to our clients, as evidenced by the global launch of Northacre and the increase in the number of managed funds our clients have access to.”