Dubai’s Shuaa Capital shares plunge to all-time low

Reuters/Jumana El Heloueh

• Bank to launch rights issue
• Stock down 98% from 2005 peak
• Sources say target is $150m

Shares in Dubai’s Shuaa Capital plunged to a record low on Tuesday after the indebted investment bank said it would launch a rights issue to increase its capital as part of attempts to bolster its finances.

Shuaa’s stock was trading at AED 0.271 at 12:53 UAE time (09:53 GMT), down the maximum 10 percent. 

The stock has fallen 98 percent from a 2005 peak, with the company never fully recovering from the 2008 global financial crisis.

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Shuaa said in a statement that, prior to the rights issue, it will reduce the company’s capital and hopes to convince holders of an AED 503 million bond ($137.1 million) maturing on October 28 to take equity in the company instead. These moves are pending shareholder and regulatory approval.

Shuaa did not specify the planned size of the capital reduction or the rights issue, although Bloomberg on Friday reported that Shuaa aims to raise $150 million in the rights issue citing unidentified sources. Shuaa has 2.54 million shares with a nominal value of AED 1.

In total, Shuaa has AED 725 million of debt maturing before June 30 2024, its second-quarter financial statement shows.

The company’s overall borrowings, including those with longer maturities, was AED 963 million as of June 30, 2023, including about AED 320 million owed to banks.

Shuaa had planned to repay AED 136 million of the AED 503 million bond that matures later this month, and would refinance the remainder by issuing a sukuk, its second-quarter financial statement says. Tuesday’s announcement of the rights issue makes no mention of the sukuk.

Shuaa made a second-quarter profit of AED 5.3 million. That compares with a loss of AED 169.9 million in the prior-year period. Quarterly revenue fell 43.3 percent over the same period to AED 37.7 million.