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Annual Report 2019 ENGINEERING INVESTMENTS ANNUAL REPORT 02 34 At a Glance Business Segment Overview Public Markets 36 Real Estate 40 Private Markets 56 Investment Solutions 60 04 Investment Banking 64 Chairman’s Letter 68 06 Corporate Governance Chief Executive’s Review 84 08 Risk Management Business Model and Strategy Merger with ADFG and New Business Model 10 Board of Directors 14 90 Senior Management Team 16 Our Vision and Strategy 18 Consolidated Financial Statements 20 Market Review Market Review 22 Real Estate Market Focus 26 1 SHUAA Annual Report 2019 SHUAA Capital (SHUAA) merged with Abu Dhabi Financial Group (ADFG) in 2019 in a transformational merger, creating the leading asset management and investment banking platform in the region. Our business philosophy is rooted in a drive for excellence and performance, uncompromising integrity and a strong team culture. One Company, Many Strengths Industry Leading Growing and Scalable Diversified Established and leading Proven record Unique product market position of growth offering Predictable Profitable Aligned Recurring revenue Strong and steady Large co-investor streams margins in our own vehicles 2 SHUAA Annual Report 2019 Growing Our Core Business 2019 Highlights Through a disciplined investment approach Following the merger with ADFG, across each of our lines of business, we 2019 has been a year of strategic continue to focus on generating investor and transformation and integration whilst shareholder value by engineering innovative we continued to deliver solid financial investment solutions and differentiated performance for our stakeholders. product offerings for institutional clients and high net worth individuals. Key Segments AUM Public Markets USD 13.9 b Private Markets Real Estate Net Income¹ Investment Solutions Investment Banking AED 47 m Key Products & Services Revenue Open-Ended Funds AED 278 m Closed-Ended Funds Permanent Capital Vehicles EBITDA Direct and Co-Investments Advisory Portfolios Discretionary Portfolios AED 186 m Corporate Finance Advisory Sales and Trading Total Assets AED 5.5 b 1. Attributable to shareholders 3 SHUAA Annual Report 2019 “The benefits of the integration with ADFG were considerable. The merger transformed our business into the leading asset management and investment banking platform in the region, expanding our footprint and client base.” 4 SHUAA Annual Report 2019 Distinguished Shareholders, Moving forward On behalf of the Board of Directors, Our goals are ambitious given the ~USD I am pleased to present you with the challenging times the whole world SHUAA Capital psc (“SHUAA”) annual and the markets are facing, but two report for 2019. things make me confident that the 14 billion objectives can be met. One is our My appointment in June 2019 as Assets Under Management management’s proven ability to turn Chairman of the Board followed the adversity into opportunity. The other unique and successful merger of SHUAA is a clearly defined strategy whose Capital with Abu Dhabi Financial Group elements include: (ADFG) into a company with c. USD 14 billion in assets under management • Accessing new revenue pools and a pivotal regional role in managing by expanding our investment capital market transactions and banking franchise towards family executing turnaround investments offices and ultra-high-net-worth in both public and private entities. individuals and growing our asset management business, resulting in The benefits of the integration with the strengthening and expansion of ADFG were considerable. The merger our core businesses; transformed our business into the leading asset management and • Increasing recurring income by investment banking platform in the engineering new products, growing region, expanding our footprint and both permanent capital vehicles and client base. It generated considerable our fixed income platform, resulting synergies, driving business performance. in a diversified product and service Finally, it underpinned SHUAA’s solid offering across our core businesses; financial performance during 2019, with and our company realising AED 47 million in net profit attributable to shareholders. • Increasing profitability and strengthening control by digitising the company, optimising our balance Clear objectives sheet structure, and increasing SHUAA’s vision centres around creating operational efficiency. sustainable value for our clients, Last year was just the beginning of employees and shareholders by what we expect to be a sustained engineering innovative investment growth path. As we look ahead, we will solutions and differentiated product concentrate on our core businesses offerings for institutional clients and and keep on doing what we are best high-net-worth individuals. We also at: exploring and creating profitable aim to accelerate our growth through opportunities, achieving sustainable further integration and synergies, as growth and maintaining profitability. well as by strengthening profitability I am confident that we will see the through recurring revenues. fruits of our efforts through the years ahead as we build on SHUAA’s unrivaled market position and expertise. Last but not least, I would like to take this opportunity to thank you for your endless support, as well as acknowledge my fellow directors and management team for their dedication and effective leadership. Sincerely, Fadhel Alali Chairman 5 SHUAA Annual Report 2019 It gives me great pleasure to address you as Chief Executive Officer of the new SHUAA Capital psc, the leading asset management and investment banking group in the region that resulted from the successful merger with Abu Dhabi Financial Group (ADFG). Without a doubt, 2019 was a milestone year for all the members of the SHUAA and ADFG families. What we achieved this year through our merger not only marked both entities’ development and growth, but also showcased us as a regional success story despite the challenging market environment. In 2019, we demonstrated our ambition of becoming a financial services powerhouse and a distinguished publicly listed entity, operating with proficiency and efficiency thanks to a dedicated group of professionals and a well-defined strategy. Our company’s inclusion in the MSCI Emerging Markets Small Cap Index on 26 November 2019 represents one of many testaments to the progress made during the year. 6 SHUAA Annual Report 2019 A year of strong A focus on our core Despite challenging market conditions in the prime Central London off-plan performance businesses residential real estate market, Northacre The consolidated financial results In line with our focused strategy, we sold generated a total of £60 million for the year ended 31 December our brokerage arm (SHUAA Securities) (c. AED 273 million) in sales from two 2019 showed the immediate positive as well as our equity market-making Central London luxury developments, outcome of the integration between business for a total value of c. AED No. 1 Palace Street and The Broadway, our two merged entities and our 100 million. SHUAA Securities was scheduled to be completed in 2020 and company’s ability to sustain revenues purchased by IHC RSC Ltd, a subsidiary 2021 respectively. and capitalise on growth opportunities. of International Holdings Company Innovation and startups represent one SHUAA generated significant revenue (IHC), whilst our market-making business of our company’s key asset classes, and realised cost synergies, reporting was acquired by Al Ramz Corporation and following on from a memorandum an EBITDA of AED 186 million and Investment & Development PJSC. of understanding we signed with an annual net profit attributable to GS SHOP of South Korea and 500 shareholders of AED 47 million. A collaborative approach Startups, we are developing a global platform for innovation hubs and co- We have set a defined strategy, SHUAA’s collaborative turnaround focusing on our company’s two working spaces known as 500 Spaces, approach across our portfolio launching a USD 100 million fund to core business segments (asset companies has helped us expand management and investment banking) develop and scale the business model our product offering, diversify our across different regions including and strengthening our balance sheet revenue streams and grow profits by managing down non-strategic the Middle East, North America, Asia, whilst accessing a wide range of Europe and North Africa. assets. With the implementation of business opportunities across different the new strategy, we are looking to geographies, in particular the UAE, expand our sources of revenue, diversify the Kingdom of Saudi Arabia and the Looking ahead our offerings within core businesses, United Kingdom. operate more efficiently and increase We at SHUAA, like everyone else, our profitability. Goldilocks, the ADGM-domiciled fund are all concerned about the spread managed by ADCM Altus Investment of Covid-19; this situation is truly unprecedented and disrupting the An impressive growth Management Limited, part of SHUAA Capital psc, reported an internal rate daily lives of many around the world. trajectory of return (IRR) of 21% and a cumulative Our primary concern is with the net return of 134% from inception human toll this outbreak has taken Our asset management business (July 2015)1 to December 31, 2019. By and may yet take and the wellbeing maintained its growth trajectory, with deploying an opportunistic long- of our shareholders, investors, partners assets under management reaching term investment strategy, also known and employees. We continue
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