Dubai: DIFC Investments (DIFCI) will retain core business assets as it continues to divest parts of its portfolio to raise $1 billion (Dh3.67 billion) by the end of 2011.
With the stated aim of increasing liquidity, the investment arm of the Dubai International Financial Centre will strengthen core business lines and "create operational efficiencies", a senior executive told Gulf News yesterday.
"DIFC Investments will continue to undertake prudent management of its investment portfolio pursuant to its long or short-term retention or divestment strategy, as necessary," Shahli Akram, acting managing director of DIFC Investments, said in an emailed response to questions.
"DIFCI may divest certain of its investment portfolio to create robust liquidity streams across the business, whilst maintaining very strong focus on augmenting returns from our core business lines and also creating operational efficiency across the board," he said.
Akram was responding to a note circulated by ratings agency Standard & Poor's which affirmed a ‘B+/B' long- and short-term corporate credit ratings on DIFCI, removed them from CreditWatch negative, and assigned a negative outlook citing "uncertainties about the timing and success of what we see as an ambitious disposal programme".
Positive step
"Although we view this as a positive step with respect to DIFCI's creditworthiness, we think it involves execution risk," S&P said in a note.
DIFCI posted a $561.4 million loss last year compared to a profit of $842.5 million in 2008, the company said in a May statement to Nasdaq Dubai, where its $1.25 billion sukuk is listed. Revenue rose 29 per cent to $891.7 million, helped by income from its UK-based Smartstream Technologies unit, which it bought three years ago.
"A selective non-core asset sale is the right approach to create necesssary liquidity," said Dr Armen V. Papazian, a financial economist and chief executive of business intelligence consultancy Keipr.
"This is an important and strategically relevant move that will allow DIFCI to refocus its portfolio. This would allow DIFC Investments and DIFC in general to refocus on the practical challenges of reinventing the financial hub," Dr Papazian told Gulf News.
"Any asset divestment would be evaluated based on opportunity and other relevant factors which will determine the profit and/or loss on exit," Akram said.
S&P has estimated DIFCI's debt at $3.1 billion as of December 31, 2009.
