UAE-based investment bank SHUAA Capital has agreed to combine operations with investment manager Abu Dhabi Financial Group (ADFG).

The consolidation is said to create the “leading asset management and investment banking platform in the region”, SHUAA said in a statement.

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The merged entity will have AED47bn ($12.8bn) in assets and operate under the ADFG brand. It will be listed on Dubai Financial Market.

As per the agreed terms of the deal, ADFG parent Abu Dhabi Capital Management will be entitled to receive 1.47 billion new Shuaa shares in exchange for the entire issued share capital of ADFG.

Abu Dhabi Capital Management will have a 58% stake in the merged group, with the remainder owned by existing Shuaa shareholders.

The deal is anticipated to close in the third quarter of this year.

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ADFG CEO Jassim Alseddiqi said: “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, ADFG and SHUAA.

“This combination will enable us to leverage ADFG’s pioneering products and services across a far broader distribution platform, bringing significant synergies to the enlarged entity.

“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 CEO Fawad Tariq Khan too welcomed the deal, saying that it will create “long-term sustainable value” for shareholders of both sides.

The deal has already secured the approval of the SHUAA board and is now pending shareholder and regulatory approvals.