Shuaa cuts 9% of Dubai workforce

The Middle Eastern market is being affected by the credit crunch as it looks to cut back on ‘overcapacity’. The investment bank operates various private equity and real estate funds, including a $533m Saudi hospitality fund.

Shuaa Capital, the Dubai-based investment bank, is to cut 9 percent of its workforce in the emirate as it looks to reduce “overcapacity” in the wake of the credit crunch.

The bank, which has launched a variety of private equity and real estate funds through subsidiaries, said the job cuts in Dubai would be across the board but predominantly affect back- and mid-office operations. The number of jobs to be lost is expected to 21.

A spokesman declined to comment on whether the job cuts would impact on the private equity operations of the bank. However in a statement Iyad Duwaji, Shuaa chief executive officer, said the reality of global market conditions had required the firm to manage administrative “expenses”. Shuaa, though, would continue to focus on Saudi Arabia and Qatar as investment areas.

Emerging markets, such as the Middle East, were, until recently, seen as being relatively insulated from the credit crunch.

However, the global liquidity squeeze has severely impacted the Middle Eastern region’s real estate markets, the major driver of the area’s boom. Investment bank EFG-Hermes recently predicted a 20 percent correction in Dubai real estate prices by 2011, a trend that is leading companies to review their operations.

State-owned property developer Nakheel, famous for building Dubai's palm-shaped island Palm Jumeirah, has already said it would shed 500 jobs, or 15 percent of its work force, while development company Emaar Properties is also reportedly considering cuts.

Shuaa Capital has been a large investor in real estate developments and in August held a $240 million first close on its latest fund, the SHUAA Saudi Hospitality Fund I, which is planning to develop and own 17 hotels, apartments and resorts across Saudi Arabia. The fund is managed by Shuaa Capital Saudi Arabia, a subsidiary of Shuaa Capital.

Shuaa Capital also has a private equity arm, Shuaa Partners, which has closed two funds: the $200 million SHUAA Partners Fund I in 2005 and the $100 million Frontier Opportunities Fund I, closed in 2007. Shuaa Partners I has exited investments in Air Arabia, a regional low-cost carrier; Rotana Hotels; and Drake & Scull International, an electrical, mechanical and plumbing contractor based in the United Arab Emirates. Frontier Opportunities Fund I has invested in Syriatel, a mobile telecommunication network with the largest market share in Syria.

The Shariah-compliant Shuaa Saudi Hospitality Fund I is targeting a final close of SAR2 billion ($533 million; €403 million).