Dubai World has ended talks with Abraaj Capital over the sale of a stake in the port operator DP World, in what is being seen as a sign of returning confidence in local markets and global trade. The collapse of the deal sent DP World shares 4 per cent higher yesterday. DP World, which is 77 per cent owned by the Dubai Government, said earlier that it had been advised by Dubai World that the talks with an unnamed private equity company were "no longer ongoing". The two companies could not agree on a price, bankers said.
The planned US$2 billion (Dh7.33bn) deal would have been one of the largest transactions in the UAE over the past 12 months, enabling a heavily indebted Dubai World to raise fresh funds. Mohammed Yasin, the chief executive at Shuaa Securities, said: "I believe this is a sign that they are not as desperate or in a rush to sell it thanks to the improvement of the world economy and general liquidity."
In May, DP World, the world's fourth-largest ports operator, said its parent was "engaged in discussions with a regional private equity firm" about the sale of a minority stake in the unit. Abraaj Capital, the region's largest private equity firm, was understood to be the buyer. However, Abraaj, which has yet to deploy about half of its $7bn assets under management, never publicly commented on the deal. Abraaj and DP World could not be reached for comment yesterday.
Dubai World also owns Nakheel, the developer of the iconic palm-shaped islands, which must repay a $3.5bn Islamic bond in December. Credit agencies see the sukuk as a litmus test for Dubai's ability to repay an estimated $64bn in debt after massive investments in tourism, trade and property in past years. The region has also been hurt by a severe liquidity squeeze after international investors pulled an estimated $180bn from UAE debt and stock markets in the aftermath of the collapse of Lehman Brothers a year ago.
Conditions for private equity deals have changed significantly since earlier this year when cheaper valuations made companies look more attractive, Mr Yasin said. "That made publicly listed companies look more attractive than private ones," he said. The decline in international trade has hurt the shares of DP World, which owns several ports in addition to its main facility in Jebel Ali, the region's largest shipping terminal. Its shares fell as low as 18 cents in March from its original listing price in November 2007 of $1.
uharnischfeger@thenational.ae
