Streamlining Dubai

Dubai's debt woes are being reflected in moves within the diverse business group of its ruler Sheikh Mohammed bin Rashid al-Maktoum. The two separate entities of Dubai International Capital (DIC), the investment company, and Dubai Group, the financial services company, are being “aligned” under holding company Dubai Holding Investment Group.

As part of the restructuring, Sameer Al Ansari, executive chairman of DIC, and Soud Ba'alawy, executive chairman of Dubai Group, assume the roles of co-chairmen of Dubai Holding Investment Group. The current chief executive of Dubai Group, Tom Volpe, takes over as the chief executive of Dubai Holding Investment Group and acting chief executive of DIC.

“While the ownership and core activities of Dubai International Capital and Dubai Group will not change, both companies are to forge a closer working relationship to realise efficiencies through the consolidation of their back office operations,” said a statement from Dubai Holding. A DIC spokesman said the shuffle will have no repercussions for the private equity group.

Dubai Holding also unveiled a new chief executive. Ahmad Bin Byat, formerly executive chairman of Dubai Holding subsidiary TECOM Investments, will work on the business's consolidation as well as put together a strategy to “increase the efficiency of the group”, the firm said in a statement.

With the spectre of default looming large for the emirate – Barclays Capital estimates its debt burden to be around $74 billion – moves to consolidate have fuelled scepticism over the sustainability of the Dubai government's various and often overlapping investment interests, including its private equity entities.

“The existence of multiple private equity operations under the Dubai Holding umbrella never made any sense to me from a cost perspective, but even more from a talent perspective,” said one Dubai-based observer.

In February, DIC replaced its deal-focused private equity bosses Sylvain Denis and Alan Hyslop in a move designed to shift the business's focus away from acquisitions and towards portfolio management.

As DIC consciously moves away from new investment opportunities just as prices are dropping, while its parent company simultaneously moves to cut its cost base, attention turns to the future of its wide-ranging portfolio, which includes theme park operator Merlin Entertainments Group and medical services provider Alliance Medical.

VOLVO CHIEF TO DRIVE ADIC INVESTMENTS
Anders Ljungqvist, former director of corporate finance at car manufacturer Volvo, has joined the Abu Dhabi Investment Company (ADIC) as the firm's first ever chief investment officer. Ljungqvist will look after ADIC's proprietary investments, which will now sit under separate management to its expanding third-party fund management business, although there will be some co-investment. ADIC has simultaneously appointed 10-year Goldman Sachs veteran Thierry Gimonnet as head of finance.

INVESTCORP BOOKS FIRST-EVER LOSS
London- and Bahrain-listed private equity firm Investcorp suffered unrealised losses of $95 million on its private equity portfolio for the six months ended December 2008. It booked an overall loss for the first time in its history, making a $511 million net loss during the second half of 2008. Investcorp's current private equity portfolio comprises 23 companies mostly based in the US and Europe.

CARLYLE CLOSES $500M MENA FUND
Global buyout firm The Carlyle Group has raised its first fund focused on the Middle East and North Africa region, garnering $500 million in commitments. The fund was launched to investors in 2007, targeting between $500 million and $1 billion. Walid Musallam, head of Carlyle's MENA team, said in a statement that the firm had been “cautious about investing in the preglobal crisis environment of high valuations” and that the region now offers an opportunity to investors.

GIH RINGS FURTHER CHANGES
Following its debt default in December, Kuwait's Global Investment House has reshuffled its management team and streamlined its reporting lines in a move described by the firm as “one of the many steps recently taken, such as reducing its operational costs and improving its business model”. It is not yet known whether the restructure will have any impact on GIH's private equity business, Global Capital Management.

EASTGATE COMPLETES PHARMA DEAL
MENA-focused Eastgate Capital Group has made its first healthcare investment, having paid $40 million for an “influential minority stake” in Egyptian firm Sigma Pharmaceutical Industries. The firm will expand into other key regional markets, including Saudi Arabia, Algeria and Sudan. Sigma was established in 1998 and, according to a statement put out by Eastgate, is currently ranked 10th in the Egyptian pharmaceutical market in terms of sales. In 2008, Sigma had revenues of more than EGP340 million ($60 million; €46 million), representing 44 percent growth over the previous year.