Abu Dhabi Financial Group's (ADFG) plan for a reverse takeover of Dubai's Shuaa Capital is set to proceed after gaining approval from the latter's board on Tuesday.

The proposed deal will see Abu Dhabi Financial Group taking 58 percent of the enlarged, combined entity, with Shuaa Capital's shareholders holding the remaining 42 percent, according to a joint statement issued by both firms on Wednesday morning.

The deal will be structured by Shuaa Capital issuing 1,470,720,000 new shares to strategic investor Abu Dhabi Capital Management in return for the entire share capital of ADFG. This will bring the total number of shares in issue to 2,535,720,000 shares. The enlarged company will retain its Dubai Financial Market listing, but will be rebranded as ADFG.

The combined entity will have more than $12.8 billion worth of assets under management, of which $11.5 billion is from ADFG, the statement said. An investors' presentation also stated that it will have 380 staff, operate in seven countries and serve 12,500 countries. The presentation also states that pro-forma financial suggest a combined net income of 135 million United Arab Emirates dirhams ($36.7 million) on revenue of 568 million dirhams.

It will be headed by ADFG's chief executive officer, Jassim Alseddiqi.

"We believe that there is a compelling investment proposition to establish a regional financial services powerhouse by bringing together two market leaders in their respective areas," Alseddiqi said.

“Having seen consolidation of the banking industry in our region, the wider financial services industry is ripe to benefit from the same process and we are proud to be leading the way with this transaction.”

Shuaa's CEO, Fawad Tariq Khan, said: “Having made excellent progress in turning our business around over the past three years, supported by ADFG as a major shareholder, we now see the potential to accelerate SHUAA’s growth.”

The deal is still subject to approval from shareholders and regulators, but is likely to complete during the third quarter of this year, the statement said.

(Writing by Michael Fahy; Editing by Mily Chakrabarty)

(michael.fahy@refinitiv.com)

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