Bahrain-based GFH Financial Group has said it is in talks with Dubai-listed investment bank Shuaa Capital and other financial institutions for potential mergers.
GFH has been in discussion with several financial institutions, including Shuaa Capital, for potential majority shares acquisitions of those financial institutions and/or mergers, GFH said in a statement to Bahrain and Dubai bourses, where its shares are traded.
The company did not provide details on other financial institutions, it is in talks with for possible majority stake acquisition or mergers.
There is a bigger discussion happening to merge Shuaa with a much bigger regional entity, Shuaa chairman Jassim Alseddiqi told MEED without naming the institution at the time.
Alseddiqi, who is also the chief executive of Abu Dhabi Financial Group (ADFG), a UAE-based alternative investment firm which bought a 48.36 per cent stake in the investment bank in November, did not elaborate on how soon the deal could be concluded. The merger, if successful, would be done as a shares transaction, he said, adding that Shuaa will retain its brand identity.
GFH in the statement said it is unable to disclose further information at this stage due to confidentiality of the discussions with the counterparties.
A merger of the two firms will create an institution with a market capitalisation of about $2.5bn.
The share price of Shuaa surged over 18 per cent to a seven-year high on Sunday and Monday. But it closed 4.2 per cent lower on 14 March. GFHs Dubai-listed shares climbed 7 per cent on 13 March but ended trade down 0.7 per cent on 14 March, after GFH released its statement.
In February, Shuaa reported a 30.4 per cent reduction in overall group losses for the financial year 2016 to AED132.5m ($36.1m) from AED190.3m. The loss for the fourth quarter of last year significantly narrowed down to AED18.9m from AED161.8m recorded for a year-earlier period.
The investment bank is actively looking at acquisitions and it already is in talks for a potential acquisition of a UAE-based financial services company, Alseddiqi said at the time, adding that the ticket size of the deal could be around AED150m.
Shuaa, on 12 March, announced that it is entering an agreement to acquire Integrated Capital and Integrated Securities from Integrated Financial Group, pending due diligence and regulatory approval.
Shuaa bought a 14 per cent stake in Khaleeji Commercial Bank (KHCB), a Bahrain-based Islamic retail lender for $25m. KHCB is a subsidiary of GFH Financial Group, which in May 2016 said that it planned to list the lender on Dubai Financial Market (DFM).