Dubai’s top stock broker targets deals overlooked by rivals

Menacorp, which has Dh6.8 billion of client deposits, has already started offering clients merger and acquisition, fund raising and equity capital market advice

Published: 17:11 August 27, 2015

Bloomberg

Dubai: Menacorp Financial Services LLC, Dubai’s biggest equities broker, is expanding into investment banking and plans to target deals overlooked by larger rivals.

“There’s hardly anyone servicing clients in the $50 million (Dh183.65 million) to $100 million ticket size,” Chief Executive Officer Fathi Ben Grira said Monday in a phone interview from the city. “This is our niche. We see a good opportunity for growth.”

Menacorp, which has Dh6.8 billion ($1.85 billion) of client deposits, has already started offering clients merger and acquisition, fund raising and equity capital market advice. It’s working on raising $50 million to $100 million in two transactions, a $50 million mergers and acquisitions deal and was hired for a local initial public offering, which has been delayed because of market volatility, Ben Grira said.

The company plans to add more bankers for equities capital market deals once regional stock markets improve, he said.

The brokerage joins a growing list of Middle Eastern firms founded by senior bankers betting on their experience and relationships with their clients to set up advisory business on their own. Samer A. Katerji, a former managing director for Citigroup’s Middle East investment banking unit, and Rody Yared, a former executive director at JPMorgan Chase & Co. started Trussbridge Advisory this year. Albert Momdjian, who handled UBS Group AG’s wealthiest clients in the Middle East, quit last year to start an investment company in Dubai.

Regional institutions

“Most of our clients are regional institutions, corporations and high networth individuals who also happen to be chairmen of their family business groups,” said Ben Grira, a former Lazard Ltd. investment banker. “These people know us, talk to us on a daily basis and rely on our advice and with investment banking we are providing them with one more service.”

Menacorp has also hired Arshad Khan, former chief executive officer of the Bahrain Financial Exchange, to lead its expansion into commodities trading. The company was approved as a member of the Dubai Gold & Commodities Exchange in June and may trade materials such as copper and spot gold when the product is made available on the exchange, Ben Grira said. It started with seven brokers and plans to expand staff.

“Our initial focus is Indian rupee futures and gold futures and I want to see the results on these two products first,” he said.

Revenue Declines

Stock brokerage revenue for Menacorp has dropped about 50 per cent this year, amid a slump in the United Arab Emirates’ equities markets, Ben Grira said. The company last year traded about Dh110 billion of shares on the Dubai and Abu Dhabi’s exchanges and expects to trade half that this year.

Equities trading in Dubai and Abu Dhabi has shrunk as plunging oil prices raised concern that economic growth in the region will slow. Dubai’s DFM General Index has dropped 3 per cent in 2015, with trading down 28 per cent so far this year from last year’s daily average, according to data compiled by Bloomberg. Abu Dhabi’s ADX General Index declined 2.9 per cent, with average trading down almost 50 per cent.

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