#DubaiInvestments Looks to Cash In On Growth #Dubai #Investments, the owner of stakes in more than 38 companies, is in advanced talks for two acquisitions that it hopes to conclude in the coming months. The investments may total about $100 million, says Khalid bin Kalban, managing director and chief executive officer of Dubai Investments, declining to name the targets. “One firm is in the financial services sector and other is in real estate,” he says. The move comes as the DFM-listed holding company presses ahead with plans to exit some of its businesses as Dubai’s economy strengthens. Dubai Investments, which operates in sectors including real estate, financial services and investments, slowed its divestment plan after the financial crisis hit Dubai in late 2008. Acquiring the financial services firm “will be a right fit”, and will help Dubai Investments prepare some of the companies within its portfolio “for potential initial public offerings (IPOs)”, says Kalban. “I think about 50 percent of our companies are ripe for divestment either by trade sale or IPO,” he adds. Kalban says the target financial firm will have expertise in asset management, corporate advisory, debt raising and brokerage. “We have agreed on the value and we are doing the due diligence now,” he says. Growth is returning to Dubai as property developers announce new projects and the number of tourists travelling to the Middle East’s trade hub increases. The emirate’s economy may expand 5 percent in 2014, the fastest pace since 2007, according to the IMF, helped by a boom in trade and tourism. “The economy is improving and it’s a good opportunity to look again at divesting some of the assets,” says Kalban. “We are a bit late because of what happened over the past five years in terms of the financial crisis.” Dubai’s benchmark stock index is the second-best performer globally, rising 47 percent this year, prompting share sales by companies. In September, an IPO by the Emaar Malls Group, the retail unit of developer Emaar Properties, became the emirate’s biggest public offering since 2007. “We are encouraging our companies to prepare themselves to go public because market conditions have improved,” says Kalban. The CEO hinted at the possibility of taking the IPO route for the real estate firm it plans to acquire. “It is eligible for IPO but the size is small. We want to increase the size and then go public,” says Kalban. Dubai Investments is also in advanced stages of “exiting another firm it owns”, says Kalban. “This time it’s going to be an IPO rather than a trade sale. We aim to take it public by the end of 2015.” In June, Dubai Investments sold a 66 percent stake in Globalpharma Co., which was valued at 385 million dirhams ($105 million), to France’s Sanofi. Dubai Investments stands to gain as Dubai spends more than $8 billion developing roads, rail lines, a new airport and an exhibition centre as it prepares to host the Expo global trade fair in 2020. Its Dubai Investments Park Development Co. unit is expected to be a big beneficiary of the event given its geographical proximity to the Expo site. “It is already benefiting us. We are seeing a lot of activity within the park. This area is becoming attractive for the big players involved in Expo 2020 and Dubai World Central,” says Kalban. “Warehousing and logistics is taking off in a big way.” Dubai Investments, whose profit jumped 118 percent in the first six months of the year, says it may be on the cusp of its first ever investment-grade rating as it bolsters cash holdings. “We are flush with liquidity thanks to the sukuk and the Sanofi deal,” says Kalban. The investment park unit sold the only dollar-denominated Islamic bond from the GCC in the first quarter of the year, in a debut issue due 2019. The current rating from S&P, one level below investment grade (BB+), applies only to the division that issued the bond. S&P let Dubai Investments know what was required for an upgrade, and Kalban says they’re preparing to advise the rating firm that the conditions have been met. “We have fixed the leverage, we fixed the liquidity requirements and we fixed potential indirect liabilities. I am optimistic they [S&P] will consider,” he says. An improved rating will not lead to another sukuk issue from the company, Kalban says. “We have untapped borrowing limits from several banks, which we are not utilising,” he says. In recent months, several companies have announced large projects to benefit from Dubai’s property boom. Dubai Investments plans to relaunch its Mirdif Hills project, a mixed-use development near Mushrif Park in Dubai soon. “At Dubai Investments, we have a strong thrust in developing our real estate portfolio over the next two to three years,” says Kalban. The firm is also looking at taking its Dubai Investment Park model overseas. Kalban, who is also chairman of Dubai-based developer Union Properties, dismisses talk of a bubble, saying government measures are helping to curb speculation and cool the market. “Most developers have learnt lessons from the crisis, they know the risks and are more careful this time,” he says.
Posted on: Tue, 16 Dec 2014 05:58:07 +0000
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