Jasim Alseddiqi
Jasim Alseddiqi, CEO of Shuaa Capital, is eyeing an opportunity from a rise in fixed-income issues in the Gulf. He's not ruling out M&A possibilities either. Image Credit: Gulf News Archive

Dubai: Jassim Alseddiqi is not one to give up on real estate investments just because a pandemic has wreaked havoc on the sector’s prospects. But he has no issues in saying that all future exposures to real estate need to factor in the COVID-19 in some form or the other.

“Developers - and investors - who understand what the post-COVID wave of buyers and renters are seeking in home designs will emerge as the winners,” said the CEO of Shuaa Capital. “This is a learned lesson that we look to embody across our real estate companies.

“We assessed how this pandemic has changed the way people rent and buy real estate, especially after experiencing working remotely from home.

“I have always been - and continue to be - bullish about the prospects of real estate in the UAE despite the pressure on prices, which is a correction that all markets go through. [But] like other firms, real estate companies need to diversify their funding sources through alternative tools and debt capital market activities.”

A basket of markets

In recent years, Alseddiqi, and the entities he heads, have built up quite a sizeable presence in property. There is a signature project in London, at one of the fanciest locations in a city replete with them. There’s also a burgeoning presence in Saudi Arabia and in Eastern Europe.

“We have a presence in London through Northacre which owns high-end residential developments in central London,” he added. “And in Saudi Arabia, through Shuaa SA, which invests in hospitality and mega-residential projects. Thanks to the diversified portfolio, we can manage risks… reduce exposure to one category of asset types.

“We continuously screen opportunities across all real estate categories with an emphasis on both debt and equity investments.”

Northacre - No. 1 Palace Street
A glimpse of the immediate future... The London developer Northacre's No. 1 Palace Street project will have a pride of place at a location with its fair share of high-profile addresses. Image Credit: Gulf News Archive

An SME outreach

When the pandemic struck, and it became clear that no economic activity can distance itself, Shuaa was among the handful of private entities to come up with a package for small businesses to sign up for.

But wasn’t the SME space far removed from Shuaa’s usual comfort zone?

“Our private equity business is led by a different philosophy and driven by our strategy to deliver long-term value,” he said. “We look to invest in private companies - with a focus on turnaround, distressed and special situations.

“The SME package provides free advisory services and interest-free loans through regulated partners to support enterprises directly impacted by COVID-19,” the CEO said. “Shuaa's regulated partners will provide the interest-free loans. To be eligible for the support, the tech SMEs will need to be active and provide a strong case for the additional support they require – what, how and why. “The aid is in line with the UAE government's support measures, and it aims to provide the capital and advisory support that tech SMEs will require as they navigate through turbulent waters.”

Scripting a merged future

It was in March last year that Shuaa brought up the merger with ADFG to create a regional asset management power-player, and one with a diversified geography to oversee. Assets under its watch are reportedly over $13 billion.

“Despite the pandemic and market downturn, we managed to strengthen our position as the most active non-bank advisor in the region for sukuk issuances,” Alseddiqi said. This “increased the total amount raised for Shuaa-led sukuks to more than $600 million during the past year-and-a-half.

“Our recent transaction was Gulf Navigation's five-year senior unsecured sukuk for Dh125 million.”

A few disposals too

The brokerage operations were sold as part of the post-merger consolidation. It wasn't the only one. 

“In line with our strategy to focus on our Group’s two core businesses - asset management and investment banking - and strengthen our balance-sheet by managing down non-strategic assets, we sold our brokerage arm as well as our equity market-making business for a total deal value of Dh100 million," the CEO added.

“We have the experience of having dealt with many crises and business cycles. In all these years, we have supported several corporates with capital raising activities such as mezzanine/sub-ordinated debt, fixed income, convertibles, and preferred equity, among others.

“Considering the freeze in credit markets, we expect an increase in M&A activities and fixed-income issuance, including sukuk. At a time like this, many SMEs - and several large corporates - will look for equity via capital injections to meet their working capital needs.

“This is when the services and financial solutions of a company like Shuaa's became hugely relevant.”

The Shuaa priority list
The asset management company intends to "strengthen" the corporate restructuring services and "support businesses across the board".

"Frozen credit markets are causing liquidity issues and potential insolvency concerns for many businesses impacted by COVID-19," said Jassim Alseddiqi. "The corporate restructuring solutions will open doors for businesses to access new credit lines, enabling them to not only overcome their current challenges, but become more sustainable."