A real appetite for the mystery of DP World

Frank Kane

• Last Updated: October 31. 2009 12:12AM UAE / October 30. 2009 8:12PM GMT

Despite laudable efforts at transparency in its investor and public relations, there is still a fog of uncertainty surrounding DP World. This is not so much in terms of its own affairs – the ports and shipping business quoted on Nasdaq Dubai has arguably made more progress towards achieving international standards of corporate governance than any other UAE corporate.

It is the relationship with its parent, Dubai World, that confuses and perplexes. Since flotation in late 2007, just before world markets began to teeter towards the credit-crunch cliff, the parent company has continued to regard DP World as more or less its own private company, pulling in dividends but not really addressing the central concern for other shareholders: the destruction in investor value that has been its hallmark as a quoted company.

Floated at $1.30, the shares have never since traded at that level. After last week’s trading statement, they slipped back again to close at $0.50. Worth more than $20 billion on its IPO, DP World is now worth just over $8 billion (Dh29bn).

Beyond suggestions that the issue was overpriced in the first place, nobody can explain why DP World has performed so badly. Nobody seems to know what’s going on.

Last week, I had a very enjoyable dinner with a man who does. I will not tell you his name, because it would embarrass him and me, but he has more knowledge of the business world and the shipping industry than almost anybody else in the business. I share some of the insights gleaned over a splendid evening in downtown Dubai:

@Body-Bullets:Ÿ DP World is seeing tangible signs that world trade is recovering from the doldrums of six months ago. There are still challenges this quarter, but it is looking considerably better than it did just a short while ago;

Ÿ China is the engine of this recovery in world trade and DP World’s business. The massive government investment in domestic infrastructure is fuelling renewed global demand for raw materials;

Ÿ DP World, and its parent, are still considering options to address the decline in shareholder value;

Ÿ These options include listing the shares on another stock market to increase liquidity and trading volumes. The Dubai Financial Market is one possibility, London is another;

Ÿ Dubai World would consider selling more of the 77 per cent of stock it still holds, but only when the price gets back to around the flotation level;

Ÿ The approach by the Dubai private equity house Abraaj earlier this year was viewed as a “stalking horse” for another potential investor, with the Beijing sovereign wealth fund China Investment Corporation the leading candidate.

My dinner partner also impressed upon me the determination of Sultan bin Sulayem, chairman of them both, to see DP World and Dubai World through their present troubles, and his irritation at recent suggestions in the global media that he should somehow be held responsible for the group’s troubles. “I’ve always thought he was a very shrewd man,” was the verdict.

That dinner conversation left me feeling much better briefed on the situation at DP World than before. And much better fed.

@Body-SubheadNew:Time for some culture

The bustling lobby at Emirates Towers, usually all business handshakes and introductions, was a flurry of mwah-mwah air kisses and hugs for the opening of Christie’s international modern and contemporary art show last week.

Most connoisseurs seemed to be interested in the watches and jewellery on display ahead of the auction, rather than the art, which seemed absurdly overpriced. Huge canvases of Quranic illustrations by Egyptian artists were stunning, but for $300,000? I wouldn’t have a wall big enough for them anyway.

My fancy was taken by a striking view of the Golden Horn in Istanbul by Devrim Erbil at a rather more affordable $30,000, but I resisted the temptation to pull out the cheque book.

The top sale of the evening was the $518,500 paid for a pair of Asscher-cut diamonds, each more than 15 carats. Imagine a couple of small, diamond quail eggs.

But what really grabbed me was perhaps the biggest wristwatch I have ever seen. I’ve never really gone for these ostentatious baubles, which seem more like pieces of sculpture than practical timekeepers, but it certainly was eye-catching.

The catalogue told me it was a Harry Winston Rare Timepiece by Tourbillion Glisserie, with an asking price of $300,000. In 18-carat pink gold and with all its intricate workings exposed, it was at least three inches (7.6cm) square and almost an inch thick, and you could not possibly wear it without developing a serious list to one side.

However, if you could afford to buy it I suppose it would be counterbalanced on the opposite side by the weight of your wallet.

fkane@thenational.ae