Shuaa Capital mulls joint venture partner, loan to bolster growth

By Nicel Jane Avellana

Nov 21, 2013 04:39 AM EST

Chairman Sheikh Maktoum Hasher Al Maktoum of Shuaa Capital said the company may be looking for a joint venture partner or obtain debt in order to bolster the growth of its lending unit. After five years of losses, the investment bank is looking to rebuild its business. The company was able to post profits in two straight quarters for the first time after struggling since the 2008 financial crisis.

In an interview with Bloomberg in Dubai, Al Maktoum said the company is considering an increase of the loan book of its Gulf Finance Corp unit. A company representative said the bank is looking to double the unit's lending to AED 1.4 billion from AED 800 million.

Al Maktoum said that a partnership, partial sale or a bond were some of the firm's options for growth. He said, "We would like cheap funding, we would like more deal flow and there are many routes to get to those things." He added that Shuaa is also looking to get more consistent profit through recurring revenue, such as those that can be derived from lending and asset management. Al Maktoum also said Shuaa can gain resources by getting a partner for its parent company or for Gulf Finance Corp.

According to a report by HSBC Holdings released on November 6, local banks may be interested in the lending unit of Shuaa after the takeover of Dubai First and Aseel Islamic Finance by First Gulf Bank. HSBC has given an "underweight" rating which is equal to a sell to Shuaa.

Al Maktoum said Shuaa is now looking on making smaller but more deals and has told its investment banking team to set its sights on small and mid-sized firms. He also told Bloomberg that it may be able to raise AED 200 million from lenders and other structures in the following year.

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