Dubai Investments to spend Dh400m to acquire 2 firms

Dubai Investments, listed on Dubai Financial Market, will be spending between Dh350 million and Dh400 million to acquire two companies in the UAE before year-end, a senior company executive told Emirates 24/7.

“We are looking at acquiring two UAE-based companies – one in the financial services sector and other in the real estate sector ¬  before end of the year. These acquisitions will cost us anywhere between Dh350 and Dh400 million,” Khalid bin Kalban, Chief Executive Officer, Dubai Investments, said, without revealing the names of the companies.

“The financial service company is a right fit for us. Though we are a financial company, we are lacking financial services in a sense that we don’t have expertise in asset management, corporate advisory, debt raising and brokerage… this will definitely complement our model and help us prepare some of the companies within our portfolio for potential initial public offerings (IPOs).”

Kalban hinted on the possibility of taking the IPO route for the real estate company set to be acquired.

“Most of companies are LLCs… the one (real estate company) we are looking to acquire is a privately held company. It is one step towards IPOs... all we have to do is to structure it in a way to enlarge its business model and we are ready for the IPO,” he said.

Possible IPOs in early 2016

However, the possibility for the IPO for the real estate company planned to be acquired or any of the 38 companies in Dubai Investments’ portfolio will be known only by early 2016.

“We have 38 companies in our portfolio and definitely most of them will have to be exited sooner or later.  Moreover, we are encouraged by the authority allowing Emaar Properties to sell 15 per cent in Emaar Malls Group.

“We have been trying for the last five to six years with authorities and regulators (Dubai Financial Market) to tell that to exit 55 per cent of any company is ‘no go’ and so we are hoping that regulations and laws will change to allow us to exit partially… nothing more than 30 per cent and then within a few years we will exit to reach that 55 per cent level eventually,” Kalban asserted, referring to the 15 per cent limit allowed for Emaar Malls Group IPO as “the step in the right direction.”

Dh400m net profit for Q4

Dubai Investments CEO said he expects “full year net profit 2014 to reach Dh1.4 billion, with the fourth quarter net profit estimated at Dh400 million.”

The company reported a net profit of Dh995 million for the nine-month period ended September 30, 2014, an increase of 87 per cent compared to a net profit of Dh531 million for the same period last year.

Kalban added that they were looking at closing major real estate deals within the group that will increase their cash in hand from Dh1.5 billion as of end September 30, 2014, to Dh1.8 billion in the first quarter 2015.

“The cash flow coming from various units of our businesses are very strong, so we are in a very good state of liquidity… our debt to equity ratio is less than 20 per cent,” he said.

Dubai Investments, listed on Dubai Financial Market, sold a 66 per cent equity stake in its wholly owned pharmaceutical unit Globalpharma to French drugmaker Sanofi - the deal contributing a profit of Dhs472 million for the second quarter 2014.

Going for corporate rating

Dubai Investments is also going in for corporate rating from Standard & Poor’s Financial Services.

“We are in discussions and they had asked us to meet some requirements which we have met. Now, the review will happen mid next year,” Kalban said, adding, he was hoping for an “investment grade.”

Investment Corporation of Dubai owns an 11.5 per cent stake in Dubai Investments.
 

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