Ahmed Humaid al Tayer Appointed Head of the DIFC

The newly appointed governor of the Dubai International Financial Centre (DIFC) has pledged to build on its success in promoting Dubai as a vital hub for capital and investment.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, on Saturday issued a decree naming Ahmed Humaid al Tayer to replace Omar bin Sulaiman, who had led the DIFC since its creation in late 2004.

“We are here to establish an international financial centre for the UAE, to serve the region and to co-operate with other centres from Hong Kong to Frankfurt and London,” said Mr al Tayer, who is also the chairman of Emirates NBD, the largest UAE bank by assets.

His appointment followed an announcement last week that Sheikh Mohammed had named himself and two family members to replace three of Dubai’s most prominent officials on the board of the Investment Corporation of Dubai (ICD), the main government asset-management vehicle.

Bankers and analysts downplayed suggestions in international reports that the appointments represented demotions or signified a political schism.

While the crisis has raised criticisms about the borrowing used to slingshot Dubai’s growth earlier this decade, they said the transfers were part of a broader financial restructuring to help refinance the roughly US$10 billion (Dh36.73bn) in debts that Dubai needs to repay next year. That sum is part of an estimated $85bn in total debts owed by the Dubai Government and the companies it controls.

Mr bin Sulaiman will remain the deputy chairman of the Central Bank, a spokesman for the regulator confirmed. The Central Bank has lent Dubai $10bn for the Dubai Financial Support Fund, which is overseeing efforts to restructure the emirate’s debts.

The three remaining officials also retained key positions. Mohammed al Gergawi, who was removed from the ICD board, also serves as the chairman of Dubai Holding, which manages the personal wealth of Sheikh Mohammed. He is also the Minister of Cabinet Affairs.

A second ICD board member replaced last week, Mohammed Alabbar, remained the chairman of Emaar Properties, the government-controlled developer, as well as the chairman of the Dubai Economic Advisory Council.

The third former ICD board member, Sultan Ahmed bin Sulayem, remained the chairman of Dubai World, the government-owned holding company that controls DP World and owns another key Dubai developer, Nakheel Development.

“Every board member who is leaving and coming, their contribution is highly appreciated,” Mr al Tayer said yesterday. “We are always soldiers to this country, to serve our country.”

The DIFC is in many ways an emblem of Dubai’s achievements. Established in 2002, the organisation is one of Dubai’s Government-owned free zones, designed specifically to position the emirate as a hub for financial services and investment.

In addition to not having taxes on income or profits, the DIFC offers 100 per cent foreign ownership, while the UAE as a whole still requires that companies be at least 51 per cent Emirati owned.

“The fact that Dubai is established as one of the major financial centres of the world is testament to the vision of the local authorities and the investment made in physical infrastructure and people skills,” said Peter Gotke, a vice president at The Bank of New York Mellon, which like many major banks has its offices in the DIFC.

“Whilst the DIFC lives that vision, the regulators and authorities have continued to evolve laws and access to make the region accessible and liquid.”

The DIFC, like many Dubai Government-controlled entities, became highly leveraged in the course of its expansion. As a real estate development, however, DIFC is doing relatively well, analysts say.

Despite financial difficulties faced by many tenants, there is still a waiting list of at least 400 wanting to take up space, said a report last month by the ratings agency Standard and Poor’s.

DIFC racked up further debts when it paid $630 million in early 2006 for a 3.5 per cent stake in the European stock-exchange operator Euronext, which gave it a 2 per cent stake in NASDAQ Dubai. DIFC also owns one-fifth of Borse Dubai, the holding company for both NASDAQ Dubai and the city’s larger stock exchange, the Dubai Financial Market.

DIFC bought a 2.2 per cent stake in Deutsche Bank in early 2007 and also owns stakes in Dubai Aerospace and in the private equity firm Abraaj Capital. DIFC typically financed these investments with private equity-style leverage, Standard and Poor’s said, paying for about a fifth of the investment in cash and borrowing the remainder.

That strategy left it vulnerable when the financial crisis started and credit for refinancing dried up. Standard and Poor’s said the DIFC had a debt-to-capital ratio of 76 per cent. The DIFC received a $1bn lifeline from the Dubai Department of Finance last year, which it used to repay $500m in loans.

The company is also due to repay a $350m loan this week. It has $1.25bn in debt due in mid-2012.

By: Wayne Arnold and Uta Harnischfeger - The National

uharnischfeger@thenational.ae

warnold@thenational.ae

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Dubai International Capital

Dubai International Capital, the investment arm of government affiliated Dubai Holding, will focus on the region rather than abroad over the next year, according to the firm’s chairman and chief executive.

“I don’t want to invest now [outside the region]; globally, we are heading into a deep recession… which could last for one to two years and makes me want to be conservative,” said Sameer al Ansari, at a conference in Dubai today.

He added that the only deals completed by DIC this year were in emerging markets, where he believed better opportunities exist.

“Perhaps in the next 12 to 18 months, more lucrative opportunities will arise in the US and Europe; but for now, the focus should be on the region,” he said.

When asked about Dubai’s rising debt as an obstacle to encouraging investments in the region, Mr Ansari countered that the emirate’s debt levels were manageable, particularly in a region with an abundance of oil.

DIC, established in 2004, has a diverse, international portfolio consisting of stakes in aircraft manufacturer EADS in the Netherlands, electronics manufacturer Sony in Japan and HSBC bank in the UK.

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World Pension Forum - Dubai

Strong and world class regulatory and corporate governance frameworks will ensure continued prosperity of the resilient UAE economy, according to Her Excellency Sheikha Lubna Al Qasimi, UAE Minister for Foreign Trade.

Welcoming delegates to the inaugural World Pension Forum, titled 'Pearls of the Gulf', Her Excellency Sheikha Lubna elaborated on the fundamental strengths behind Dubai and the UAE's growth story and highlighted the government's proactive measures during the global financial turmoil.

Hosted by Dubai Group, the leading diversified financial services company of Dubai Holding, the World Pension Forum in the Middle East opened in Dubai on 17 November, and will conclude on 20 November with a day's session in Abu Dhabi.

In her welcome address, Her Excellency Sheikha Lubna said: "From the government's perspective, I can tell you that nowhere else will you find a more open and welcoming business environment than in the UAE. We are part of the global economy, and despite the impact of the world financial crisis, the economic diversity of the Middle East, as evidenced in countries such as the UAE, will continue to underpin economic growth."

Sheikha Lubna emphasized that Dubai has now become a well recognized and growing financial hub with a successful and credible track record in attracting foreign investment, and encouraging entrepreneurship. Dubai's strategic position in relation to Europe, Asia and Africa, makes it the destination of choice for foreign direct investment in the region.

Around 18 companies out of top 50 in the Global Fortune 500 list such as GE, Citigroup, Samsung, Honda, Nissan, Siemens, HSBC, Deutsche Bank, Goldman Sachs and IBM have substantial operations in Dubai.

Other prominent speakers at the WPF included Soud Ba'alawy, Executive Chairman, Dubai GroupDubai Group, and Philip Schaefer, President of the World Pension Forum.

The forum in Dubai attracted more than 80 leading pension funds from the US, as well as government officials and senior executives of leading UAE companies. The forum is designed to facilitate the development of long term partnerships between the funds and the Middle East.

Offerings insight into the new patterns of global trade and people flows, the expanded role of sovereign wealth, and the execution of first-class infrastructure, the event also works as a platform giving UAE-based companies an opportunity to share their success stories with international delegates.

Founded in 1992, the World Pension Forum hosts various conferences around the world to help US pension fund managers make informed decisions and allocate funds to potential investment destinations.

Investors that are members of the World Pension Forum include CalPERS, CalSTRS, the Kennedy Family Trust, New York State Teacher's Retirement System, as well as major state pension funds and foundations.

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