SHUAA Capital executives recently approved a resolution to borrow up to 180 million Emirati dirhams ($49 million) by way of a medium-term bond issue. “The company is in advanced talks with a number of local and Gulf Cooperation Council (GCC) financial institutions, regarding the terms and pricing of the proposed issue, which will be by way of a private placement,” said SHUAA Chief Executive Officer (CEO) Lyad Duwaji.
“Strong interest has emerged from Kuwait, where the market for such securities is well developed, far more so than in the UAE. A number of Kuwaiti companies issued Kuwaiti Dinar bonds last year, but no non-Kuwaiti companies have issued in Kuwait for a long time,” added Duwaji.
SHUAA Capital would be the first local, non-government public shareholding company to issue a bond in the United Arab Emirates (UAE) and the second company to do so in general, the first being Emirates Airlines in 2001 for Dh1.5 billion ($408 million), stated a company press release.
In response to a question about the intended purpose of the new funds, Duwaji commented, “The proceeds from the issue will be used in support of the company's general business activities. This will help to reduce our reliance on short-term borrowing and better match the maturity of our assets and liabilities.”
He added that SHUAA Capital is seeking an independent credit rating, which he hopes will make it easier for banks to assess its credit worthiness in the future. Local banks have until now concentrated on commercial and consumer lending. Extending loans to service or financial companies is a less popular transaction.
The international bond market has seen a lot of activity recently, with many private companies raising funds from borrowing, in order to take advantage of record low global interest rates. Market observers said that this move comes at a good time for the capital market in the UAE, which has been dormant for the last two years, with little or no activity by companies to raise new funds.
SHUAA Capital was established in 1979, with the principal goal of investing in, and promoting investment into, the Arab World. It pursued its investment strategy by focusing initially on private equity investments in the region and later proprietary trading in Arab listed securities.
In 1996, SHUAA Capital was licensed by the UAE Central Bank in 2000 to offer financial services and products including fund and portfolio management; corporate finance activities, underwriting of securities; investment advisory services; and brokerage of local and international securities. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
