UAE’s Shuaa Capital, ADFG mandate banks on merger plan

Shuaa Capital and Abu Dhabi Financial Group (ADFG) have mandated UBS and JPMorgan Chase & Co as advisers on a potential merger between the United Arab Emirates investment firms, an ADFG spokesman said.

Dubai-listed investment bank Shuaa Capital said on Sunday it had started talks on a possible merger with ADFG.

Shuaa said each party has formed a working group, and upon review, working groups will report their recommendations to their respective boards, adding that there is no certainty that a deal will happen.

Switzerland’s UBS and law firm Linklaters are working with Shuaa Capital, while New York-listed J.P. Morgan is working with ADFG, said the ADFG spokesman in response to queries by Reuters.

The deal is on fast track to be completed before June, said a source close to the deal who declined to be named because of commercial sensitivities.

Shuaa Capital, UBS and J.P. Morgan declined to comment on ADFG’s remarks today.

ADFG, an alternative investment company with more than $20 billion in assets under management, owns a 48.36 percent stake in Shuaa, according to Eikon data.

With the potential merger, ADFG aims to become a regional financial power house with interests in real estate, financial services, insurance, public markets, the source said.

That source, and a second one told Reuters that ADFG’s ultimate intention is a potential reverse takeover.

A reverse takeover is when a private company becomes a publicly listed company after acquiring a controlling stake in a public company. It allows companies to become listed without having to go through an initial public offering (IPO).

Shuaa’s shares on Sunday surged 15 percent, reaching their maximum daily price increase threshold. The shares were up another 11.9 percent by midday on Monday.