Al Mal Capital PSC, a Dubai-based investment bank whose shareholders include members of Abu Dhabi’s ruling family, will boost staff by 20 percent in 2013 as the economy recovers, Deputy Chairman Naser Nabulsi said.
“The first phase was to swim and survive, and we survived,” Nabulsi said in an interview in Dubai on Feb. 13. “2013 is going to be a good year for companies who prepared for the next cycle.”
Investment banks in the United Arab Emirates are rebuilding their businesses more than four years after the global financial crisis triggered a real estate crash in the country and an exodus of foreign investment from the nation’s stock exchanges. To cope with the slowdown, Al Mal cut its staff to below 20 from more than 100 and shut its securities brokerage in the last three years, helping cut yearly costs by 80 percent, Nabulsi said.
Volume on local bourses has picked up after Dubai’s economy grew at the fastest pace since 2007 last year and the city’s equities index jumped 16 percent in January, the best start to a year since the exchange started operations in 2000, according to data compiled by Bloomberg. Average volume last month was double the 12-month daily average, the data show.
“We’ve seen fierce cash coming into Dubai equities from Saudi, Qatar and foreign funds and into real estate,” said Nabulsi, who headed the Dubai International Financial Centre, a tax-free hub for international banks and asset managers, when it opened in 2004. “There’s a fundamental shift in Dubai’s image and this has a lot to do with the market momentum and investors’ confidence.”
Property prices in the emirate, which is home to the world’s tallest skyscraper, rose in some neighborhoods last year after the crash sent them tumbling more than 60 percent from peaks in mid-2008. Dubai’s economy probably expanded 5 percent in 2012 due to a rebound in tourism, hotel and restaurant industries, according to government estimates.
The recovery “is real and will continue going forward,” Nabulsi said. “When things are looking good for the economy, we’re going to do just as well.”
January’s average volume was still about half the shares traded in the month in 2008, according to data compiled by Bloomberg, leading some investment banks to diversify their businesses.
Shuaa Capital PSC, an investment bank controlled by Dubai’s ruler, said in October it plans to boost lending to small- and medium-sized businesses and high-net-worth individuals to improve profit margins. The bank, which cut jobs and ended retail brokerage last year, has reported annual losses since 2008. Morgan Stanley and Credit Suisse Group AG decided to move their regional equities bases from Dubai to Riyadh, home to the Arab world’s largest bourse.
Al Mal has 220 million dirhams in capital ($60 million) after last month giving 40 percent of excess liquidity back to shareholders, according to Nabulsi. The company is working on four to five mandates for mergers and acquisitions in the six- nation Gulf Cooperation Council and expects a drought in initial public offerings may be coming to an end, he said.
“Our attention will be on growing the asset management going forward,” said Nabulsi, adding that Al Mal wants to boost by 25 percent annually the assets it manages over the next five years. “We may start to see a lot of family companies going public. A lot of them are waiting for the end of the first quarter to make sure this is a genuine recovery.”
The investment bank will also add two funds this year and plans to start wealth management services, in conjunction with partners in the U.K., Turkey and India, to promote third party funds, according to Nabulsi. The Al Mal U.A.E. Equity Fund returned 30 percent in 2012, outpacing of 20 percent for benchmark DFM General Index, data compiled by Bloomberg show.
“Increased liquidity, falling risks of entities, improved confidence and access to debt capital markets will pave the way for solid equity returns in 2013 and beyond,” Nabulsi said. “Investors want stability, growth and security and it’s all in the U.A.E. We’re in for a real rally.”
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