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Shuaa Capital to Issue 515m New Shares

DUBAI — Shuaa Capital said on Saturday that it would issue 515 million shares to Dubai Banking Group, or DBG, implementing an agreement to resolve a long-running bond dispute.

Dubai-based investment bank yesterday said that it has got an approval from the authorities concerned and requested the Dubai Financial Market to issue 515 million new shares to DBG.

The move follows the agreement regarding the convertible bonds issued by Shuaa to DBG, whereby the group will convert the Dh1.5 billion convertible notes into 515 million shares, representing a 48.4 per cent stake of Shuaa’s share capital.

In June, the investment bank settled a long-running dispute with DBG over Dh1.5 billion of convertible bonds, which gave DBG a 48.4 per cent stake in Shuaa Capital.

Under the deal, the bank’s issued and paid-up capital will be increased by Dh515 million to Dh1.065 billion, while total shareholders’ equity will remain unchanged at Dh2.16 billion as declared in the second-quarter financial statements, the investment bank said.

The new agreement represents a conversion price of Dh2.91 per share, equal to a premium of 93 per cent to the closing share price of Shuaa of Dh1.51 on August 27, 2009, Shuaa said.

Earlier this month, the investment bank returned to profit after three quarters of losses as gains on investments helped boost second-quarter net profit by 37 per cent to Dh91.7 million.

Shuaa fired Chief Financial Officer Michael Burgess in May and its Chief Executive Iyad Duwaji resigned on August 12. “My decision to leave is a personal one,” Duwaji, who stepped down after 20 years of service, said. He said that he planned to return to the buy-side and set up an independent private equity platform.

Duwaji, who was instrumental in transforming Shuaa from a small investment company in 1995 to one of the region’s leading investment banks, said earlier this month that the worst was over for the company and there was a light at the end of the tunnel.

Moody’s Investors Service on June 30 said it is reviewing Shuaa Capital’s B1 foreign currency and local issuer ratings for a possible upgrade after it resolved its dispute over a Dh1.5 billion bond conversion with DBG.

Headquartered in Dubai, Shuaa Capital has a regional presence with offices in Abu Dhabi, Riyadh, Doha, Cairo, Beirut and Istanbul.

· abdulbasit@khaleejtimes.com