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Dubai Bank Rasmala in potential sale talks
Chairman says firm is in talks to raise capital, no sale planned; Sources said Rasmala reached out to local players for sale; Regional investment banks in the Gulf have struggled in recent years
November 16, 2011 8:21 by Reuters
The Dubai-based firm’s founder and chairman, Ali al Shihabi, said the firm is in talks about a capital boost and not planning an outright sale.
“Rasmala is in discussion with one party that has expressed an interest in investing in the company as part of a capital raise,” he said in an emailed statement.
“Rasmala has 35 shareholders and some may be selling and others buying at any time so maybe secondary market transactions caused such rumors.”
The company, which counts Deutsche Bank among its shareholders, has offices in the United Arab Emirates, Saudi Arabia, Oman and Egypt and operates in asset management, corporate finance and institutional brokerage.
Like most regional Gulf investment banks, Rasmala has suffered in the aftermath of the global financial crisis and amid increased competition from foreign banks.
The bank has approached Commercial Bank of Dubai and Palestine Investment Authority for a potential sale, one of the sources said, as well as other investment banks in the region.
Rasmala, with around $900 million in assets, already manages the proprietary assets of CBD under its asset management business, its website showed. Earlier this year, the bank secured $15 million from the Palestine Investment Fund, the Palestinian Authority’s primary vehicle for foreign investments, for an equity fund.
The sources spoke on condition of anonymity.
“It’s going to be a tough sell for sure. Market conditions are extremely difficult and even small, boutique firms like Rasmala will find it tough going to find a partner,” the source said.
Earlier this year, a slump in market turnover forced Rasmala to close its UAE retail brokerage business and to focus on institutional brokerage and research, asset management and corporate finance.
Turnover and trading volumes on the Dubai and Abu Dhabi exchanges have fallen, extending a trend that started as the global financial crisis struck in 2008.
To add to the woes, foreign banks have eaten into investment banking business emerging from advising on mergers and acquisition deals and arranging equity and debt offerings, leaving most regional banks with very little revenue streams.
Investment banking fees in the Middle East reached $316.6 million in the first three quarters of 2011, a 35 percent decline from the same period in 2010 when fees reached $483.8 million, according to Thomson Reuters data. (By Dinesh Nair; Additional reporting by Nadine Wehbe and Mirna Sleiman,; Editing by Amran Abocar)