Dubai investment plan goes global

Dubai International Capital (DIC), the new investment arm of Dubai Holding, is in advanced negotiations with several regional and international firms, some which are very high profile companies, the group's CEO said.

Sameer Al Ansari declined to name the companies targeted for investment by DIC, but said he expected "several high profile announcements" within the next few months.

"We are working on several transactions regionally and internationally, some of them household names. We are at an advanced stage of negotiations with them," he told Gulf News in an interview.

"We believe that in the next two to three years, DIC will be the biggest private entity in the region," he said.

Cash flow

He explained that DIC will use its cash flow to acquire controlling stakes in private companies, many of them underperforming, to allow it to control their management, put them back on their feet and potentially list them on regional exchanges such as the Dubai International Financial Exchange, which should be up and running in the next year. Regional analysts said DIC has at its disposal a large fund as part of efforts by Dubai Holding, which is one of the biggest groups in the Middle East, to promote its strategic growth in and beyond the region.

Strategy

The strategy, they added, was similar to that employed by Prince Al Waleed Bin Talal, who amassed a fortune of more than $20 billion and is one of the world's wealthiest persons.

But they also said the tactic would be different because unlike Prince Al Waleed who bought shares in these underperforming companies, the DIC would buy majority stakes to control these companies' growth potential.

Asked about the nature of businesses DIC will target during its campaign, Al Ansari said: "We will identify companies that have potential but are underperforming, or companies that require funding to expand their business or where there are merger opportunities.

"We acquire a controlling interest, provide strategic advice and add value through our substantial network. We will grow the value of these business and then choose an appropriate exit time and method."

Dubai International Capital is considering private equity investments in North America, Europe, Asia and the Mena region.

The company will make direct investments and will also consider co-investment with reputable partners and private equity funds around the world.

"DIC will also create opportunities and invest in these opportunities, especially in Dubai and the region. Sometimes we come up with our own ideas and invest in those ideas," he added.

In the medium term, the group is looking to structure and offer investment funds to offer small and big investors in the region and abroad the chance to benefit from Dubai's rapid growth.

"The reason for creating these funds is the fact that there is substantial capital in the region looking for investment opportunities but not many appropriate vehicles in which they can invest.

"If you take the UAE, for example, everybody would like to have a stake in the development and growth in Dubai, but not everybody has $100 million to put in a building or a project. They might have a million dollars or half a million dollars to buy into a fund."

Family firms

Without going into details, Al Ansari mentioned in particular family firms, which have been spawned in the region following the oil boom, and which constitute around 80 per cent of businesses in the Gulf Cooperation Council (GCC).

He said some of these companies were not getting the proper valuation for an IPO listing that would offer them an exit option.

They include companies held by expatriates who may be planning to return home.

"The listing rules at the moment make it difficult for these family-owned companies to list on the stock market and get an appropriate valuation," Al Ansari said.

"They can come to us and we provide them with an exit strategy or have joint ventures with them."