ABU DHABI, UAE: Abu Dhabi Financial Group (ADFG), a leading investment group in the region, and SHUAA Capital (SHUAA), a market leader in regional investment banking and capital markets, have agreed terms to combine the two businesses in a milestone transaction for the regional financial services industry.
The combination of ADFG and SHUAA will build on the successful collaboration to date, which has seen SHUAA making continued progress towards long-term sustainable profitability since ADFG’s original investment in November 2016. The transaction is a natural next step, enabling ADFG and SHUAA to accelerate their growth ambitions by fully integrating the two businesses.
Furthermore, it represents a transformational combination to establish the leading Asset Management and Investment Banking platform in the region.
Under the terms of the transaction, SHUAA will issue 1.470 billion new SHUAA shares to ADFG’s parent company Abu Dhabi Capital Management in return for the entire issued share capital of Abu Dhabi Financial Group (ADFG). This implies the Abu Dhabi Capital Management will own 58% of the enlarged entity.
As a demonstration of the Abu Dhabi Capital Management’s commitment to the Transaction, the new SHUAA shares will be subject to a 12-month lock-up from the date of admission. The agreed valuation represents a 60% premium to the undisturbed SHUAA share price.
Following the admission of the new SHUAA shares, the issued share capital of SHUAA will increase from 1.065 billion SHUAA shares to 2.535 billion SHUAA shares. The combined entity will remain listed on Dubai Financial Market and is expected to be rebranded as “ADFG” with work on a full integration plan underway. The Transaction has been approved by SHUAA’s Board of Directors
The Transaction is subject to SHUAA shareholder approval, customary regulatory approvals and satisfaction of conditions precedent. The transaction is expected to be completed in Q3 2019.
The Transaction benefits from a strong strategic rationale, representing an exciting opportunity for both ADFG and SHUAA to build on their successful partnership and further enhance their collaboration. The combined customer base will benefit from an unmatched product suite across the financial services value chain.
The combined entity will benefit from ADFG’s unmatched track record of investment and unique expertise across the Middle East and beyond. The Transaction also provides SHUAA with access to proprietary transaction flows from within the broader ADFG ecosystem which will be highly beneficial across combined entity’s enlarged customer base.
Including ADFG’s assets under management (AUM) of over US$11.5 billion, the combined entity will boast US$12.8 billion in AUM. Pro forma revenue for SHUAA would increase by 176% in FY18 and pro forma FY18 EBITDA margins would improve from 34% to 38%.
Fawad Tariq Khan, CEO of SHUAA, commented, “The combined business will benefit from considerable synergies, an expansive distribution network and a deep pool of talent. All of this will help drive the business performance and create real and long-term sustainable value for shareholders of both companies.”
Jassim Alseddiqi, CEO of ADFG, said, “We believe that there is a compelling investment proposition to establish a regional financial services powerhouse by bringing together two market leaders in their respective areas, ADFG and SHUAA.”