Dubai Islamic Bank and Dubai World to launch US$ 5 billion family of sector specific private equity funds
Posted: 05-04-2006 , 07:32 GMT
Dubai Islamic Bank and Dubai World today announced the launch of the first of its kind US$5 billion family of private equity funds to participate in strategic transactions on a global basis. Dubai Islamic Bank Dubai WorldDubai World is the holding company of Dubai Ports World, Free Zone Corporation, Nakheel, Istithmar and Dubai Multi Commodities Centre among others.
The family of funds that will be launched over the next 18 months comprises seven specific private equity funds covering strategic sectors: Energy, Financial Institutions, Infrastructure, Real Estate, Health and Education, General Industrials and Technology, Media & Telecommunications (TMT). Each fund will be managed by a dedicated team of experienced private equity and industry experts with a proven track record.
The funds will be supported by external advisors including Norton Rose and Baker McKenzie as legal advisors, Ernst & Young as auditors and The Bank of New York as escrow agent. This unique project would allow investors to participate in highly profitable strategic transactions in the sectors of their choice and would strengthen the UAE and Dubai’s position as the financial hub of the Middle East.
Dubai Islamic Bank and Dubai World will be seed investors in each fund. Other investors will include blue chip institutions from the Middle East and beyond. Investors’ initial contributions will represent approximately 30 per cent of total commitments in each fund. Future drawdowns from investors will be on need-basis.
His Excellency Dr Mohammad Khalfan Bin Kharbash, UAE Minister of State for Finance and Industry and Chairman of Dubai Islamic Bank said: “DIB and Dubai World partnered to launch the family of funds that will reinforce UAE as the financial hub of the GCC and the greater Middle East and provide viable investment opportunities on a global basis to public and private investors,” Kharbash added.
Sharing the details, Kharbash said: “The Energy Fund will focus on exceptional opportunities generated by growing demand from Asia. The Financial Institutions Fund will actively participate in consolidation opportunities and the growth in demand for Islamic Banking worldwide. The TMT fund will focus on growth opportunities in the Middle East, Asia and Africa where new technologies combined with under-penetrated communications markets provide unique investment opportunities.”
“The first few funds are expected to be raised during 2006. These funds will be managed by world class experts in the field of Financial Advisory and Private Equity,” he concluded.
His Excellency Sultan Ahmed bin Sulayem, Executive Chairman of Dubai World said: “This project will raise one of the largest and highest profile family of funds in the world and is a manifestation of Dubai’s position as a leading financial center. This US$5 billion family of private equity funds will be leveraged to complete transactions in excess of US$10 billion. These funds will offer institutions and high net worth individuals the rare opportunity to acquire stakes in private companies that operate in some of the most strategic industry sectors globally and will provide a viable alternative to stock market investments.”
“The family of funds will attract world-class talent and leading institutions to Dubai and contribute to the overall development of the UAE. Dubai will also capture numerous indirect benefits from this initiative such as improvements in the financial, economic and knowledge capital as well as increased visibility on a global scale,” Sulayem added.
The combined financial strength and influence of the funds’ core investors will provide preferred access to highly visible transactions alongside leading international companies on a global basis. Initial investors will also have preferential rights to co-invest alongside the funds in these attractive transactions.
Saad Mohammad Abdul Razak, CEO of Dubai Islamic Bank said: “This project provides a unique investment opportunity to investors from the GCC and beyond to participate in highly profitable and visible transactions that are expected to generate returns in excess of 20 to 25% depending on the sector. It is also a strategic initiative for Dubai since it will create Dubai-based institutions with financial scope and expertise that will be able to compete on a global basis with the leading international private equity firms and financial institutions.
“The industry sectors of these funds should also attract Islamic investors who seek to diversify their investment portfolio away from more traditional products,” Abdul Razak added.
The funds will focus on transactions with predictable returns and clear exit strategies via public offerings or trade sales. Each fund might also be partially listed within the first three years at the appropriate time should market conditions be favorable, providing additional liquidity to investors.
Aref Kooheji, CEO of the Investment Banking Group at Dubai Islamic Bank said: “This project is in line with DIB’s Investment Banking Group systematic drive to develop new products in order to meet clients’ needs and adapt to new market development. We believe that our sector based approach to private equity will generate very attractive returns and provide customized diversification to our investors.”
“It is a sea change from the generalist and regional approach to private equity prevalent in the region to date. It is therefore a differentiated investment proposition to the institutions and high net worth individuals of the UAE and the Gulf region. This initiative is also consistent with our strategy of attracting and retaining the best talents in the global financial community with a view of providing comprehensive investment banking coverage and services in priority to public and private institutions in the UAE and the greater Middle East,” he added.
About DIB:
Dubai Islamic Bank (DIB), established in 1975, is the first Islamic bank to have incorporated the principles of Islam in all its practices.
DIB is a public joint stock company and its share is quoted on the Dubai Financial Market. The bank enjoys a reputation as a leader and innovator in maintaining the quality, flexibility and accessibility of its products and services. In a very short space of time it has created market leading services and products that are setting benchmarks for the rest of the sector.
The bank’s recent financial results confirm the strength of its balance sheet and profitability. The bank reported net profit for the year ending 31st December 2005 of AED1.061 billion rising by 130 per cent compared to AED461 million in 2004. The profit for the bank, including depositors’ profits, reported a 97 per cent increase for the year ending December 2005 at AED2 billion compared to AED1.017 million for 2004.
Financing and investment operations also delivered strong growth, with total financing now standing at AED25.6 billion rising by 46 per cent compared to 2004. Total assets reported a 40 per cent increase to AED43 billion. Customer deposits too showed an aggressive growth, reaching AED33.34 billion in the year, a growth of 34 per cent over 2005.
The bank has been proactive in creating partnerships and alliances at local and international level. DIB has adapted an aggressive expansion strategy, which started with the establishment of DIB Pakistan Limited, a wholly owned subsidiary of DIB. The bank has also co-managed Pakistan’s US$600 million first Sovereign Islamic bond issue that received a tremendous response from investors.
DIB opened its first representative office in Turkey to improve its access to that market. DIB has also acquired 60 per cent of its stake in Al Khartoum Bank and is also among the parents banks of Emirates and Sudan Bank (ESB). The steps taken mark DIB’s ambitious plans to roll out its operations into regional and international markets as part of its overall strategic plan.
DIB has also shown its outstanding capabilities by being appointed to provide specialist financial solutions for huge developmental projects including the Dubai Ports, Customs & Free Zone Corporation (PCFC) world’s largest Sukuk, Dubai’s Department of Civil Aviation US$1 billion Islamic bond issue. The issue was arranged to raise funding for the second phase of the expansion of Dubai International Airport. The bank also managed financing of US$350 million for Nakheel. The financing made further capital available to build on Nakheel’s blue chip portfolio of developments such as The Palm in Dubai.
© 2006 Al Bawaba (www.albawaba.com)
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