• Business

SHUAA Capital’s Strategic Move: Capital Raise through Rights Issue

by Swati Gupta

October 9, 2023 19

In a significant strategic maneuver, SHUAA Capital has unveiled its plan to augment its issued share capital through a Rights Issue, following the preliminary green light from its Board. This pivotal decision underlines SHUAA’s commitment to fortify its financial position and set the stage for a new phase of growth.

A Transformational Move: SHUAA’s Rights Issue Strategy

The Rights Issue will be closely preceded by a capital reduction and exchange offer tailored for noteholders holding bonds maturing in October 2023. The successful execution of this multifaceted strategy is contingent upon securing approvals from shareholders and the requisite regulatory authorities.

Key Objectives: A Roadmap for Transformation

This strategic move sets forth a comprehensive roadmap for SHUAA Capital’s transformation and future sustainability. The primary objectives include:

1. Enhancing Profitability Metrics: SHUAA Capital aims to significantly bolster its profitability metrics to align with its standing as a prominent player in the financial services sector.
2. De-Risking the Business: A core focus of this initiative is to substantially reduce business risks through a targeted debt reduction strategy. By achieving this, SHUAA seeks to reinstate the health of its balance sheet, ensuring it maintains appropriate and sustainable debt ratios.
3. Unlocking Dividend Potential: The capital optimization plan also positions SHUAA to explore future dividend distributions to its shareholders. This potential dividend payout is envisioned without the encumbrance of high finance costs and debt service requirements.
4. Expanding Shareholder Base: SHUAA Capital aims to facilitate the participation of both existing shareholders and new investors in its growth trajectory. Simultaneously, this move intends to increase the free float of SHUAA’s shareholding, enhancing liquidity in the market.

A Timely Implementation: Conditional on Approvals

SHUAA Capital is on track to complete this capital optimization initiative by the end of the current year. However, the successful realization of this strategy is subject to obtaining the necessary regulatory approvals and garnering the support of shareholders. Full details regarding this transformative move will be disclosed as part of an upcoming Shareholders’ General Assembly, which will be convened in due course.

Advisors at the Helm: Structuring and Legal Counsel

To steer this significant recapitalization strategy, SHUAA Capital has enlisted the expertise of reputable advisors. Houlihan Lokey is playing a pivotal role in advising SHUAA, contributing insights into the structuring, sizing, and pricing aspects of the recapitalization. In addition, Baker Botts has been appointed as the Legal Adviser, ensuring that the legal intricacies of this transformative move are expertly navigated.

As SHUAA Capital embarks on this transformative journey, it reinforces its commitment to its shareholders, stakeholders, and the financial industry as a whole. This strategic move not only seeks to fortify SHUAA’s position but also holds the promise of enhancing the company’s value proposition in the market. SHUAA’s proactive approach and vision for a sustainable future position it as a key player in the ever-evolving landscape of financial services.