Dubai Investments targets acquisition of Abu Dhabi property developer
Dubai Investments’ next acquisition is likely to be in the Abu Dhabi property sector after the company yesterday announced plans to acquire 60 per cent of Dubai-based Al Mal Capital to help manage its Dh3 billion portfolio.
It plans to acquire an Abu Dhabi property developer next month and divest two businesses next year, its chairman said.
The conglomerate, which owns stakes in almost 40 companies, yesterday disclosed plans to acquire 60 per cent of Al Mal Capital to use the investment bank as a platform to advise on deals and manage DI’s investment portfolio.
DI, whose largest shareholder is the state-owned Investment Corporation of Dubai, said it determined the price by net asset value according to the financial statements.
It has agreed to buy Al Mal for Dh150 million at “book value”. Al Mal Capital has assets of Dh500m and equity of Dh260m, Khalid bin Kalban said. Al Mal Capital declined to comment on the deal.
“The premium will come later. Whoever stayed as a shareholder will benefit,” Mr bin Kalban said yesterday.
“We have at least two targets with potential exits in 2016. Soon, within one month, we will be acquiring an Abu Dhabi real estate [company], which is a private joint stock, and we already agreed on the pricing. Again, it’s going to be on a book value.”
Al Mal Capital, whose business spans investment banking, asset management and private equity, was forced to shut its brokerage and cut costs after the 2009 Dubai financial crisis. It decreased its head count from 100 staff to below 20 over three years and moved its offices from Dubai’s Emaar Square to Tecom to reduce expenses.
DI’s businesses are divided into three broad categories – property makes up about 58 per cent, manufacturing is 20 per cent and investments are about 22 per cent, Mr bin Kalban said. He added the company plans to rely more on investments.
DI plans to mandate Al Mal Capital to manage its Dh3 billion investment portfolio, which DI takes care of now with a small team, Mr bin Kalban said. The aim is for it to become a vehicle for investment exits and private placements.
“That’s why we bought the company. It will do so many things for us and will complement the portfolio we’re having,” he added.
“It’s a win-win situation for both parties,” said Nabil Farhat, a partner at Al Fajer Securities in Abu Dhabi.
“It makes sense for Dubai Investments because they own a lot of subsidiaries and want to take these companies public or restructure. At the same time, they are going into a new line of business, which is asset management.”
DI’s credit profile was upgraded to BB+ from BB by Standard & Poor’s Ratings Services in June after one of its subsidiaries, Dubai Investments Park Development Company, issued a five-year sukuk and strengthened the group’s liquidity.
Shares of DI headed towards the maximum one-day price increase yesterday, soaring 13.7 per cent to close at Dh2.48.
Separately, the conglomerate reported a 63 per cent rise in net profit to Dh1.34bn last year, it said.
The board recommended a cash dividend of 12 per cent and bonus shares of 6 per cent, subject to shareholder approval, the company said.
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Updated: February 1, 2015 04:00 AM