The buyer’s good-bye

David Jackson's leadership of Istithmar was brief and tumultuous.

As a former New York investment banker, David Jackson’s deal-driven stewardship of Dubai’s Istithmar World Capital is perhaps not surprising.

But as a one-time buyer for retail giant Saks Fifth Avenue, Jackson should have known better than most private equity investors that today’s hot fashion often becomes tomorrow’s fashion catastrophe. Such was the trajectory of the Istithmar World private equity portfolio, acquired largely in the heady months following Jackson’s appointment as chief executive in 2006, and now an overleveraged problem for the Middle Eastern institution. Jackson resigned as chief executive officer last month.

David Jackson

Jackson’s background in fashion was one of many aspects that made him a unique figure on the global private equity stage. Under his leadership, Istithmar acquired an eye-catching collection of luxury brands that no doubt originally won the strong support of Dubai’s Emirati elite. These deals included the acquisition of high-end retailer Barneys New York, New York’s W Hotel Union Square and Mandarin Oriental hotel, the Fontainebleau Hotel in Miami, Montreal-based circus Cirque du Soleil and Yacht Haven Grande in the Carribbean.

These investments are now severely impaired, according to reports. The W Hotel Union Square was recently sold to real estate firm Lubert-Adler for $2 million. Istithmar paid $285 million for the business in 2006.

Before moving to Dubai from New York, the 43-year-old Jackson spent nine years at Lehman Brothers working his way up to senior vice president in the mergers and acquisitions practice. In 2002 he joined a start-up advisory boutique called Marco Polo Partners, which was a division of the Marco Polo Network, a provider of trading systems for emerging markets securities. A senior executive at Marco Polo Network told PEI that Marco Polo Partners was a “little unit” focused on corporate finance in the emerging markets, and that the business has now been wound down. He declined to answer further questions.

In a 2008 interview with The Deal magazine, Jackson described Marco Polo Partners as focused on the energy sector, saying only that it was “a good idea, bad timing”.

In the Deal interview, he said of his time at Lehman Brothers: “I was a deal junkie and am probably still one at heart . . . Once you’ve been trained as an M&A banker at a place like Lehman, you don’t grow out of it.”