SHUAA Capital Shows Improvement Amidst Capital Optimization Efforts

SHUAA Capital PSC, a prominent asset management and investment banking platform based in the United Arab Emirates, has released its financial results for the first half of 2024. The company reported an adjusted net operating loss of AED 2 million, marking a favorable improvement of AED 5 million compared to the previous year. This positive trajectory is reflective of SHUAA's ongoing efforts to optimize its capital structure and enhance operational efficiency.

On a quarter-over-quarter basis, SHUAA has made notable strides in reducing losses, reporting a net loss attributable to shareholders of AED 29.5 million in Q2 2024, down from AED 87.2 million in Q1 2024. This reduction in losses is accompanied by a significant 8% increase in operating margin compared to the prior year, driven by cost efficiencies beginning to permeate through the bottom line.

During the first half of the year, SHUAA continued its balance sheet optimization efforts, including valuation adjustments related to underlying assets of an associate and impairments of legacy investments in the UK. Management views these impairments as necessary steps in the company's capital optimization journey, facilitating a right-sized balance sheet and establishing a lean and efficient capital structure.

In April 2024, SHUAA reached an agreement with bondholders to amend and extend the agreement until 31 March 2025, aiming to reduce the company's leverage by over AED 500 million. To facilitate this, SHUAA has engaged advisors to satisfy the regulatory requirements associated with the issuance of mandatory convertible bonds (MCBs). The company intends to complete this process before the end of 2024, subject to the required regulatory and shareholder approvals.

SHUAA is now better positioned for business growth by increasing its assets under management, securing new mandates, and deepening engagement with both existing and new clients. The company continues to attract new talents across all business verticals while strengthening relationships with creditors and key stakeholders. SHUAA will also benefit from its increased ownership in Eshraq, now exceeding 25% both directly and indirectly, as a result of the capital reduction through the cancellation of treasury shares.

Wafik Ben Mansour, Group CEO of SHUAA Capital, expressed his satisfaction with the accomplishments in the first half of the year, attributing the progress to the dedication of the board of directors and management team. He emphasized the company's commitment to refocusing on its core financial services business, delivering exceptional service and innovative products to clients and the community.

In conclusion, SHUAA Capital's financial results for the first half of 2024 indicate a positive trend towards recovery and growth. The company's strategic initiatives, including capital optimization and asset management expansion, position it well for future success. Investors should consider holding their positions in SHUAA Capital as the company continues to implement its growth strategies and improve its financial performance.