Dubai Investments, a diversified company in which sovereign wealth fund Investment Corporation of Dubai has an 11.54 per cent stake, expects a 20 per cent first quarter net profit increase and plans to launch initial public offerings for two units and a real estate investment trust as it broadens its portfolio.
"There have been a lot of issues globally, geopolitical circumstances and issues around government fees and VAT," said Khalid bin Kalban, managing director and chief executive of Dubai Investments, in an interview with The National. "But I believe we will have some rebound in the economy by the second half of this year which will create better momentum in the run-up to Expo 2020 Dubai."
The company’s net profit for 2017 stood at Dh1bn – in line with 2016 earnings once a one-gain from divestments totalling Dh186m is excluded.
Dubai Investments is planning to establish a mixed-use Reit with an initial asset size of Dh3 billion that would be floated on Dubai Financial Market – the stock exchange where Dubai Investments’ shares are also listed – making it the first ever Reit to list on DFM.
“Reits give investors another instrument to invest in, while for us, offloading some of our assets into a Reit and exchanging that with units or shares will create liquidity and deleverage our portfolio so it is more balanced,” said Mr bin Kalban.
The Reit will comprise hospitals, hotels, shopping malls, warehousing, logistics, residential, offices and other commercial property from across the entire UAE. Real estate accounts for almost 68 per cent of Dubai Investments’ total assets and contributes 57 per cent to the group’s revenue.
“It will cover from Abu Dhabi all the way to Fujairah,” said Mr bin Kalban. “That’s the uniqueness of it – it’s not only the diversification of the assets, it’s also the geographical spread.” He was speaking after the company’s annual general meeting in Dubai on Wednesday night. Dubai Investments is awaiting final approvals from the stock exchange regulator and hopes to list the Reit by the third quarter of 2018.
Reits are listed funds that own income-producing commercial real estate and are legally obliged to distribute a proportion of their income, usually 80 or 90 per cent, as dividends to shareholders.
The largest Reit in the UAE, Emirates Reit, which is owned by Dubai-based fund manager Equitativa and listed on Nasdaq Dubai, has more than $1 billion of real estate assets under management. Emirates NBD, Dubai's biggest lender, also has a Reit listed on Nasdaq Dubai. Alternative investment firm Abu Dhabi Financial Group plans to launch a Sharia-compliant Reit in the first half of 2018, subject to approvals.
Dubai Investments, which approved a 12 per cent dividend to shareholders during the AGM, confirmed plans for an initial public offering on the DFM of at least 30 per cent of district cooling unit Emicool by the end of 2018.
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The company is targeting acquisitions of other district cooling plants in the UAE, before completing a private placement of Emicool in the third quarter and listing it later in the year, Mr bin Kalban told The National.
The acquisition of Emicool adds Dh2bn to the company’s balance sheet and will likely help it to reach its target to grow total assets to Dh20bn by the end of 2018, two years earlier than planned, Mr bin Kalban said. Total assets stood at Dh17bn as of December 2017.
Meanwhile, Dubai Investments is leading a consortium of investors who plan to launch in the Dubai International Financial Centre a wholesale Islamic bank with initial paid-up capital of $100m and authorised share capital of $500m.
Arkan Bank is awaiting final approvals from the DIFC regulator, Dubai Financial Services Authority, before launching in October and going for an IPO on Nasdaq Dubai in the following year, subject to the fulfilment of listing guidelines and regulatory approvals
“We believe there is a gap in the market for sharia-compliant banking,” Mr bin Kalban said. “Even though this is a wholesale bank it will accept deposits from institutions and provide loans to corporates, which will be about 30 per cent of the bank’s activity.” The other 70 per cent will be Islamic investment banking, asset management and other services, he said.