Dubais Shuaa Capital has confirmed it is in preliminary talks with the Bahrains GFH Financial Group for a possible merger.
Shuaa Capital can confirm preliminary discussions taking place between the two groups. This is also to confirm that no decision whatsoever has been reached, the company said in a statement to Dubai Financial market, where its shares are traded.
The investment bank said that as per its usual pursuit of strategic expansion opportunities, such discussions are regularly sought with other financial institutions as and when available.
GFH, on March 14, also hinted at the possibility of a merger between the two groups, when it confirmed talks with Shuaa and a number of 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, the Manama-headquartered firm said a bourse filing to Bahrain and Dubai stock exchanges, without providing details on other financial institutions, it is in talks with.
Clarification from GFH and Shuaa follows a MEED report on 12 March that Shuaa is looking for a potential merger with a larger financial institution in a deal which could be worth billions of dirhams.
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.
A merger of the two firms will create an institution with a market capitalisation of about $2.5bn. The news of the possible deal pushed the shares of both companies higher.
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 (DFM).