The global financial crisis may present opportunities for Gulf funds to acquire US and European assets.
DIC will buy 'at right time'
DUBAI // The global financial crisis may present opportunities for Gulf funds to acquire US and European assets, but at least one major Dubai investor is in no hurry to buy foreign assets until the market bottoms out. Sameer al Ansari, the head of Dubai International Capital (DIC), said global markets may have further to fall next year.
"We've done very little in 2008? we will see the right opportunities, maybe not in 2009, maybe in 2010, because we expect next year to get even worse," he told reporters on the sidelines of an economic conference in Dubai. "There will be fantastic opportunities in the next 12 to 18 months... and that is not exclusive to Europe and North America. There will be fantastic opportunities in Russia, India, China and this region."
DIC controls about US$13 billion (Dh47.75bn) in assets and is fully owned by Dubai Holding, a company owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai. Public markets represent only 10 per cent of DIC's portfolio and the group's public markets fund was only 35 per cent invested, Mr Ansari added. He also dismissed concerns over Dubai's debt, which has been estimated by rating agencies at Dh70bn. He said the debt was manageable given how fast the economy was growing, and that the rest of the region had an interest in Dubai's success.
"Dubai is a regional story. That's not going to go away. Everyone in the region has a vested interest in the success of Dubai. If Dubai suffers, the rest of the region suffers. If Dubai has a problem, the debt of the rest of the region goes up." Soud Ba'alawy, the executive chairman of Dubai Group, another company under Sheikh Mohammed's control, said the UAE was well placed to weather the financial crisis that had dragged many developed economies into recession.
But the crisis could hasten a wave of consolidation across the country, according to Hussain al Nowais, the chairman of Emirates Holdings and a member of the Abu Dhabi Council for Economic Development. On the opening day of the summit, he said Abu Dhabi was considering mergers in its banking and financial services sector because of the global crisis. "I think the credit crisis will help us reflect and make sure the projects we are proceeding with are attractive and feasible," Mr Nowais told Reuters news agency. "The fundamentals of the economy are strong."
There has been speculation that the credit crunch will force banks in the region to consolidate, with tight lending conditions and slower project funding. The two largest home finance companies, Amlak and Tamweel, have already announced plans to merge. Addressing the opening of the inaugural Summit on Global Agenda, Sheikh Mohammed blamed financial policies, not flaws in the economy, for the global financial crisis.
"I am not saying that we must have a protected economy but [we should] promote a process of co-operation to protect regional and international economies," Sheikh Mohammed said. He said unchecked lending arising from the lack of adequate controls by financial institutions had led to the US subprime crisis, and eventually the larger global economic situation that we are witnessing today, adding that cash was available in the UAE to protect the economy from any spillover from the global credit crisis, the state news agency, WAM, reported. firstname.lastname@example.org