Shuaa swings back to black, eyes acquisitions

Firm plans 1b riyal realty fund for expansion in Saudi Arabi and Egypt

Shuaa chairman told reporters at a press conference. “We have significantly reduced the bleeding of the SME legacy portfolio and we expect profitability in the lending business and Shuaa overall to continue this year.”

Revenues, however, dipped to Dh31.7 million in the three months to March, compared to Dh45.4 million in the same period last year.

The drop was attributed to its lending unit, Gulf Finance Company, which went on a lending spree, amassing an SME loan portfolio of Dh750 million, most of which later turned out to be toxic and cost the company Dh400 million.

“GFC’s legacy portfolio was a large portfolio and we are mothballing it because it’s a toxic portfolio,” he added.

Collections have increased tremendously in the lending unit and provisions have decreased due to restructuring and re-optimisation.

“We have done a lot of work at GFC in turning around the portfolio, and stopping the bleeding,” Al Seddiqi said. “We are managing the turbulent legacy portfolio, and turning this into an opportunity and trying to salvage value.”

From now on, the company will focus on secured assetbacked lending with double digit returns. he company has set its sights on acquiring a listed firm in financial services in the GCC. “We are still [holding] discussions on [the size of the] stake,” Al Seddiqi said.

The company is also in the process of finalising the acquisitions of Integrated Capital and Integrated Securities, subject to regulatory approvals.

“We will announce something in the next few weeks,” he added.

Shuaa would be looking to scale and synergies from its acquisitions, he said.

Shuaa is also eyeing expansion in its focus markets that include Saudi Arabia and Egypt. The company has revealed plans to launch a one billion Saudi riyal (Dh978 million) real estate fund.

“We would be announcing a fund that has been fully paid up and committed, that would be around one billion Saudi riyals to invest in the real estate sector. This is positive. We are also discussing with the Tadawul [the Saudi bourse] to list a Reit in Saudi,” Al Seddiqi said.

Shuaa is also keeping an eagle eye out for Egypt opportunities.

“It’s better to be early than to be late to the party,” Al Seddiqi said, when asked whether the recent devaluation of the Egyptian pound would hamper its plans to operate in the country.