Markets Update: Dubai Investments' shares surge after reports that the company is expecting to exit from some investments that have been on the block throughout the financial crisis.
Dubai Investments shares on a roll
Dubai Investments' shares rose dramatically after the company said it would take advantage of rising asset prices to exit some of its investments.
The company's shares, listed on the Dubai Financial Market General Index, advanced 9 per cent to 94.9 fils each in trading yesterday, having risen 56.8 per cent since the start of the year.
The index rose 4.7 per cent yesterday, with Dubai Investments the third-biggest mover. Dubai Investments owns stakes in companies in sectors as diverse as polystyrene production, sports management and satellites. The company is planning a US$200 million (Dh734.6m) sukuk sale alongside its potential exits, said Khalid Kalban, the company's managing director and chief executive.
"We have three companies under evaluation or due diligence for private placements and by summer we can decide on exits," he told Bloomberg News.
"The economy is improving and the whole dust surrounding the financial situation is settling. It's a good opportunity to look again at divesting some of the assets."
The sukuk is aimed as part of a planned expansion of Emirates Float Glass factory in Abu Dhabi.
Investment firms including Abraaj Capital and Gulf Capital have increased purchases recently, as the local economy recovers and credit conditions ease.
The expectation of the asset sales had existed for some time, but optimism over Dubai Investments' ability to off-load its property assets had lifted the company's stocks, said Yazan Abdeen, a fund manager at ING Investment Management.
"Historically, this company has had three to five assets up for sale for the past three to four years," he said. "The bulk of the assets are real estate and real estate services. The pricing right now for these assets has started to pick up."
Dubai Investments' plans for its sukuk sale also reflected intentions to move away from property towards industrial companies, which are more closely linked to the business cycle, he added.