Shuaa Capital receives Board approval for Rights Issue
DUBAI, October 9, 2023
Shuaa Capital, a leading asset management and investment banking platform in the region, has announced its intention to increase its issued share capital through a Rights Issue following initial approval from its Board.
The proceeds from the Rights Issue will be used to 'extinguish losses' and repay its upcoming bond maturity following the exit of its largest shareholder, according to a bourse filing. Last month, Shuaa’s former Managing Director Jassim Alseddiqi sold 30 million of his shares through a special deal. Bloomberg has reported that Shuaa Capital’s Rights Issue will fetch around $150 million.
The Rights Issue will be immediately preceded by a capital reduction and exchange offer to noteholders of its bond maturing in October 2023, subject to approvals from shareholders and relevant regulatory authorities.
Repositioning itself
The company intends to use the capital optimisation to reposition itself for growth with the following key objectives:
*Improvement and sustainability of profitability metrics befitting a leading financial services player
*Significantly de-risk business through debt reduction and restore balance sheet health with appropriate and sustainable debt ratios
*Position the company for future dividend distributions to shareholders unencumbered by elevated finance costs and debt service requirements
*Enable participation from existing shareholders and new investors in Shuaa’s growth story while also increasing the free float of Shuaa’s shareholding to increase liquidity
Shuaa aims to complete the capital optimisation by the end of this year, conditional on obtaining the necessary regulatory and shareholder approvals. Full details will be made available as part of a Shareholders’ General Assembly to be called in due course.
Positive feedback
Fawad Tariq Khan, Group CEO of Shuaa Capital, said: “We have received positive feedback so far from our existing valued stakeholders and are pleased to provide the opportunity for all eligible shareholders to participate in our continued growth. Shuaa remains fully dedicated to managing this process diligently, and we aim to work closely with various stakeholders to ensure the success of the capital increase. The Rights Issue is one step in a series of actions, which Shuaa will be implementing going forward within a new strategy to reposition Shuaa for growth.”
Houlihan Lokey is advising Shuaa regarding structuring, sizing, and pricing of the recapitalisation, and Baker Botts has been appointed as Legal Adviser.--TradeArabia News Service
