Dubai Holding, the emirate's largest corporate entity with operations in more than a dozen sectors, yesterday took two large strides towards restructuring its financial and real estate operations.
The back offices of three real estate entities – Dubai Properties Group, Sama Dubai and Mizin (a member of Tatweer) – were brought under one consolidated operation.
A similar decision merged the back-office operations of Dubai Group and Dubai International Capital (DIC) under the umbrella of Dubai Holding Investment Group (DHIG). Soud Ba'alawy, Executive Chairman of Dubai Group, and Sameer Al Ansari, Executive Chairman of DIC, will take on the roles of Co-Chairmen of DHIG, a wholly-owned subsidiary of Dubai Holding that holds the conglomerate's stake in DIC and Dubai Group. In addition to his current role as Chief Executive of Dubai Group, Tom Volpe will become the CEO of DHIG and Acting CEO of DIC.
DIC spokesperson Mark Lunn defined the development as "not a merger" but "an alignment". "They will share their back offices," Lunn said, listing departments like information technology, human resources, finance and office space.
Lunn said the restructuring may result in "some redundancies" in the coming days. "Over a period of time we should be able to find some cost efficiencies. We cannot say anything about when we will take such a step. I think it may take some time".
The restructuring, which Lunn described as a cost-cutting measure, comes as a response to the global crisis. "The global slowdown is very severe. Any business anywhere in the world should be looking to save costs right now," he said.
"There is no question that firms worldwide will restructure to beat the recession. The quicker you do it, the more confidence you create in stakeholders," said an analyst.
Sama Dubai Executive Chairman Farhan Faraidooni ruled out a merger between the three real estate companies at this time. He said: "The property market is stagnant. Bringing the back offices together will help save costs at the group level."
While the ownership and core activities of the three realty entities and the two financial firms will not change, "they will realise efficiencies through the consolidation of their back-office operations", two separate statements from Dubai Holding said.
The restructuring will also have no impact on the legal relationship that the firms have with their partners, including contractors and investors, they said. (Inputs by Parag Deulgaonkar and Shashank Shekhar)
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