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Dubai plans fund to tap into Gulf liquidity |
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10/19/2006 11:23:19 AM |
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Istithmar, an investment arm of the Dubai government, is considering opening up its products to regional investors as it seeks to tap into the massive financial liquidity in other parts of the Gulf and bolster its own profile abroad.
David Jackson, chief executive officer, told the Financial Times that the three-year-old Istithmar – which has multiplied investments abroad in recent months, including a $1bn (€800m, $535m) stake in Standard Chartered – would probably open a fund, or several funds, to outside investors.
“There is this excess liquidity and in a perverse way we’ve been prodded by other investors to work with them and invest their money,” said Mr Jackson. “We scratched our heads and we said let us find a way to work with other investors towards advancing our investment goals and theirs.”
Istithmar’s new strategy comes as Dubai seeks to establish itself as a main platform for the recycling of petrodollars, with its institutions attracting money from other parts of the region and investing them abroad.
During the previous oil booms of the 1970s and 1990s, government and private investors often resorted to international banks to deploy their funds.
This time, a raft of investment companies from the Gulf region has emerged to take up at least part of that role. “Petrodollars were sent to London and New York to be recycled – now a lot of people say why not build financial institutions in the region to do it,” added Mr Jackson.
Istithmar’s ambition for bringing in outside investors will be tested through the joint venture fund established last month with AIG Global Real Estate to buy property in emerging markets. “We’ll open it (the fund) up and it’ll be a test case,” said Mr Jackson.
Istithmar was formed as part of the Dubai World, one of three main government holding companies, and its original objective was to invest the group’s excess liquidity.
With a focus on private equity and real estate, including acquisitions of iconic buildings around the world, its investment portfolio rose from $1bn at the beginning of 2005 to $3bn today, amounting to $9bn in enterprise value.
Mr Jackson said Istithmar was set to open offices in New York and Shanghai but the company’s investment strategy was driven less by geography and more by industry trends.
Investment sectors he was interested in include media content providers and healthcare companies.
In a separate interview with Reuters on Wednesday Mr Jackson said Istithmar is looking to buy controlling stakes in both a western European media company in a deal worth $4bn and a consumer company in North America worth $2bn. But he did not give any details on the target companies. |
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