Abu Dhabi Financial Group (ADFG) and Shuaa Capital have agreed to a merger and to create a new enlarged entity estimated to be worth $12.8 billion, Gulf News reported.
As a part of the deal, Shuaa Captial will issue 1.47 billion new shares to Abu Dhabi Capital Management, ADFG’s parent company, in return for the entire issued shares of ADFG.
In the new entity, Shuaa Capital’s existing shareholders will own 42 per cent stake, Abu Dhabi Financial Group shareholders will own the other 58 per cent.
The new Shuaa shares will be subject to a 12-month lock-in period from the date of admission as it will signify the investor’s commitment to the merger. The valuation is a 60 percent premium to the Shuaa’s share price.
The National reported that the transaction is already approved by Shuaa’s board, although, it still requires the company shareholders’ approval. According to the UAE paper, the deal could be finalised in the third quarter of this year.
While the combined entity is expected to be rebranded as ‘ADFG’ and it will remain listed on the Dubai stock exchange.
Fawad Tariq Khan, CEO of Shuaa thanked ADFG for its support as a major shareholder; he noted that the new entity will benefit from considerable synergies, a far less stressed distribution network, and their joint expertise.
Jassim Alseddiqi, CEO of ADFG, regarded the merger as a milestone, and believes that the new entity will establish itself as a financial services powerhouse.
Ahead of the ADFG, Shuaa merger, ADFG is also one of the major stakeholders in Shuaa Capital. ADFG bought a 48% stake in Shuaa Capital back in 2016.