Dubai sells Bombay Stock Exchange stake to Soros

Dubai Holding, one of the emirate's biggest government conglomerates, has sold its 4 per cent stake in the Bombay Stock Exchange to the billionaire hedge fund investor.

Dubai Holding, one of the emirate's biggest government conglomerates, has sold its 4 per cent stake in the Bombay Stock Exchange to George Soros, the billionaire hedge fund investor. Mr Soros, renowned for his gutsy investments yet still taken to task in some quarters for contributing to sterling's crash in 1992, bought the stake in Asia's oldest stock exchange from Dubai Financial Group (DFG), a subsidiary that invests in financial services companies. Mr Soros reportedly paid about US$35 million (Dh128.5m) for the stake via his Quantum hedge fund.

The move gave Mr Soros part of an exchange doing a brisk business in one of the world's fastest-growing economies. For Dubai Holding, the sale provides cash as it restructures its businesses and sells assets to repay debts. A company spokesman did not respond to a request for comment. Dubai Holding reorganised its businesses into four main groups late last year - property, business parks, hospitality and investments - and began a reassessment of its investment strategy.

The conglomerate has already off-loaded stakes in numerous companies. Dubai International Capital (DIC), its international private equity arm, in May agreed with creditor banks to delay repayment of some debts by three months. Altogether, the group owes more than Dh22 billion to banks and investors, according to Bloomberg data. About Dh11.5bn of that comes due this year and next, which has led some analysts to suggest that further asset sales may be on the way as the company addresses its borrowings. Standard & Poor's (S&P), the global credit ratings agency, said in January the Dubai Holding Commercial Operations Group (DHCOG), another subsidiary, might have problems fulfilling financial obligations this year.

"We understand that free cash flows are likely to be negative for 2009 and 2010, which we believe will deteriorate DHCOG's liquidity position and could ultimately weaken its ability to meet its 2010 debt maturities," S&P said. In December, DFG sold part of a 25 per cent stake in the Egyptian investment bank EFG-Hermes acquired in 2007. The company raised $120m from that sale and still owns 18.5 per cent, according to Bloomberg data.

Its stakes in Oman's Bank Muscat and Cyprus's Marfin Popular Bank have also been reduced over the past year, regulatory filings show. DIC, meanwhile, sold its 6 per cent stake in Merlin Entertainments - the owner and operator of the famous Madame Tussauds wax-works museums - in June. [e-mail]