SHUAA Capital Faces AED 945M Losses, Implements Recovery Plan
SHUAA Capital PSC, a leading asset management and investment banking platform in the UAE, has reported significant accumulated losses but is taking proactive measures to recover.
Summary
SHUAA Capital PSC reports AED 945 million in accumulated losses due to various impairments and write-offs. The company is implementing a capital optimization plan to address these losses.
On August 14, 2024, SHUAA Capital PSC, a prominent asset management and investment banking platform based in Dubai, United Arab Emirates, released its financial statements for Q2 2024, revealing accumulated losses amounting to AED 945 million. The accumulated losses to capital ratio stands at 37.28%, a figure that highlights the significant financial challenges the company is currently facing.
These losses are primarily attributed to several key factors:
- Fair value losses due to impairment of investments, goodwill, and receivable write-offs associated with the company’s investments in the UK.
- Impairment of investment and receivable write-offs linked to the company’s legacy real estate assets.
- Losses arising from the company’s associate due to valuation adjustments of its underlying asset.
- Recognition of a deferred tax liability following the implementation of corporate tax law in the UAE.
- Receivables write-off associated with a revision of land valuation in the UAE.
- Fair value losses from the company’s investment in public market securities and managed investments.
In response to these financial setbacks, SHUAA Capital has initiated several measures aimed at capital optimization. Notably, the company has secured an agreement with noteholders to amend the terms of its USD 150 million bonds issued by an affiliated special purpose vehicle (SPV). This agreement provides bondholders with the option to convert a portion of their bonds into equity through the issuance of Mandatory Convertible Bonds (MCB). Additionally, any outstanding non-converting bonds may be settled at a discount in cash.
The proactive steps taken by SHUAA Capital to address its accumulated losses demonstrate the company's commitment to financial stability and long-term growth. The capital optimization plan, which includes the conversion of debt into equity, is a strategic move that aims to reduce the company's leverage and improve its balance sheet.
Despite the current financial challenges, the future outlook for SHUAA Capital remains optimistic. The company's diversified investment portfolio, combined with its innovative approach to asset management and investment banking, positions it well for recovery and future growth. Investors should closely monitor the company's progress in executing its capital optimization plan and its ability to navigate the current economic landscape.
Given the current situation, the recommendation for investors is to hold their positions in SHUAA Capital. While the company faces significant financial challenges, the measures being implemented indicate a proactive approach to recovery and potential future growth.
Source
Summary
On 14 August 2024, SHUAA Capital psc reported its Q2 2024 financial statements, revealing accumulated losses of AED 945 million, representing a 37.28% accumulated losses to capital ratio. The losses are primarily attributed to fair value losses and impairments related to investments, goodwill, and receivables, particularly in the UK and legacy real estate assets. Additional factors include losses from an associate's valuation adjustments, the recognition of a deferred tax liability due to new corporate tax laws in the UAE, and write-offs from revised land valuations and public market securities investments. To address these losses, SHUAA Capital has implemented capital optimization measures, including an agreement with noteholders to amend the terms of its USD 150 million bonds. This agreement allows for the conversion of a portion of the bonds into equity through Mandatory Convertible Bonds (MCB), with the remaining bonds potentially being settled at a discount in cash.
