Dubai woes cast shadow over Istithmar portfolio

Yesterday Dubai World – the investment platform owned by Dubai’s government – requested that its creditors accept a six-month debt standstill on its $60 billion of debt. It is as yet unclear what implications this will have for its wide-ranging global portfolio of private equity investments.

Dubai: Debt heavy

Through its subsidiary platform Istithmar World, the group holds stakes in a diverse selection of companies, ranging from emerging markets banking group Standard Chartered to US publisher of educational books EMPG.

The firm’s 12 investments also include 42-store high-fashion chain Barneys New York, which Istithmar purchased for $942.3 million in August 2007 after a bidding war with Japanese retailer Fast Retailing. The price was more than treble the $294.3 million Jones Apparel paid for the chain in 2004.

Having failed to find a buyer for the store earlier this year, Istithmar confirmed in September that it had injected new money into the retailer. It has also brought in Perella Weinberg Partners – another Istithmar portfolio company – to advise on the company’s restructuring.

Istithmar was looking to offload assets when markets were at their lowest this year. “The timing’s lousy, but people are saying, okay, you told us that in 2009 we’ll start to see money coming back from you, so where is it?” Istithmar’s chief executive David Jackson told the Financial Times in March.

Cirque du Soleil: Part of a varied portfolio

Istithmar also made headlines in 2008 when it acquired a 20 percent stake in Canadian-headquartered entertainment group Cirque du Soleil. Famous for its unusual live performances, Cirque du Soleil was lining up a show on Palm Jumeirah, one of the extravagant developments of Dubai World’s property arm Nakheel.

In 2007 Istithmar bought a 3 percent stake in London-based hedge fund group GLG Partners.

As part of an ongoing restructuring of its various concerns, Dubai World shifted some of hotel and property investments from Nakheel’s books over to Istithmar in September. At the same time Andy Watson, formerly of Nakheel, and Binod Narasimhan, formerly of Nakheel Hotels, were named chief investment officer and chief financial officer respectively of Istithmar World.

According to an article posted on Istithmar’s own website, the move to shift assets into Istithmar’s portfolio would send a “comforting signal” to foreign investors worried that the platform could be wound down.

Istithmar was unavailable for comment at press time.