Frank Kane: Marina project in Montenegro makes a good fit for Investment Corporation of Dubai
Investment Corporation of Dubai (ICD), the emirate’s pre-eminent investment vehicle, has splashed out a reported €200 million (Dh836.7m) on a marina development in Montenegro, on the coast of the Adriatic.
There was a little surprise on the part of ICD watchers when news began to seep out towards the end of last week. After all, ICD is one of the main vehicles for diversification of the Dubai economy. It holds the “crown jewels” of the emirate, from Emirates airline to Emirates NBD bank and Emsaar Properties.
So a relatively unknown marina in the Mediterranean seemed at first sight something of a departure. Surely Dubai wasn’t going back to the strategy of random investment in global baubles that had caused other investment vehicles in the emirate so much trouble after the global financial crisis?
In fact, the acquisition of Porto Montenegro – a superyacht marina, a hotel and a shipyard – fits in comfortably with ICD’s long-term strategy, and complements existing businesses in the ICD portfolio.
The problems faced by other Dubai investment outfits – most notably Dubai International Capital, which is now in the course of being swound up – was that they overpaid for international trophies in mature markets at the height of their valuations, pre-2009.
ICD has avoided that. It uses the returns generated from the UAE-based portfolio – which got a healthy injection on Tuesday with the announcement of another year of record profits from Emirates aviation group – to look for opportunities in emerging markets or for obviously undervalued assets.
The acquisition of a controlling stake in the international hotels group Kerzner in 2014 and the subsequent purchase of the Nigerian cement company Dangote are examples of the former; the acquisition of hotels in New York, Washington and South Africa illustrate the latter aspect of the strategy.
The Montenegro deal ticks all the right boxes for ICD. The vendor, Peter Munk of Barrick Gold fame, is believed to have invested a lot of money into the development since he bought it in 2007, but it needs deeper pockets to get it to the next stage.
ICD declined to confirm the €200m purchase price, but it looks like good value.
It gets a superyacht marina, which berths some of the biggest ships in the Mediterranean, and which is home to vessels belonging to some of the richest people in the world – but with more room available that the marinas of France and Spain.
It gets a resort and hotel, the Regent, plus a shipyard where the biggest yachts can be serviced and maintained, increasingly a very costly procedure. Dubai already knows a thing or two about shipyards, of course.
Mohammed Al Shaibani, the executive director of ICD, said the strategy was to exploit fully Porto Montenegro’s potential, which is considerable. There is scope for it to double in size to become a major destination for the super-rich tourists who play the Med each summer.
So the deal satisfies ICD’s criteria in real estate, leisure and hospitality, as well as getting it access to a new geographical area. The former Yugoslavia is increasingly of interest to other UAE investors and now ICD has a stake there too.
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Updated: May 10, 2016 04:00 AM