Dubai sets up new fund to oversee government investments

All relevant public entities must register assets, stocks, shares, licences, permits, bonds and other instruments under the Dubai Investments Fund

The Dubai Investment Fund will have financial and administrative independence to pursue its objectives, officials said. AP

Dubai has set up a new fund as an independent public entity to oversee all government investments under a law issued by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai.

The Dubai Investment Fund, which will operate on a commercial basis, will have the financial and administrative independence to pursue its objectives along with the legal mandate to do so, the Dubai Media Office said on Monday.

The investments “will seek to generate returns benefiting both current and future generations while implementing best practices and the investment policy” approved by the fund’s board, which will be chaired by Sheikh Maktoum bin Mohammed, First Deputy Ruler of Dubai.

The fund also seeks to bolster the financial stability of the Dubai government by financing its deficit and “establishing strong financial reserves”, the media office said.

The Dubai Investment Fund, “without infringing upon the powers and jurisdictions granted to the Investment Corporation of Dubai”, will invest government surpluses, establish companies and investment funds independently or in collaboration with third parties, acquire or merge companies, projects and funds, besides holding stakes in them.

It will focus on investments in stocks, bonds and securities and can explore prospects in local or international financial markets.

The fund will function as Dubai's vested authority when it comes to owning shares in listed entities such as the Dubai Electricity and Water Authority, Salik Company and Dubai Taxi Company (DTC), the media office said.

Dubai announced plans in November 2021 to list 10 state-owned companies to increase the size of its financial market to Dh3 trillion ($817 billion).

Four of the 10 state-owned enterprises listed on the Dubai Financial Market last year.

The listing of Dewa was the largest GCC initial public offering last year, raising $6.1 billion. State-owned Tecom, Salik and Empower collectively raised $2.2 billion in June, September and November 2022, respectively.

Meanwhile, DTC started trading on the DFM this month after raising Dh1.2 billion in an IPO that was 130 times oversubscribed.

Five state-owned enterprises have listed on the Dubai Financial Market in the last two years. AFP

The fund will "relieve the Dubai government of rights and obligations related to companies, specifically in the context of ownership of shares comprising the capital of such companies, as also all contracts, agreements, commitments, deposits, bank accounts and loans associated with such shares", the media office said.

It can also deal in movable and immovable assets, manage funds, provide mortgages and guarantees, and participate in the financial derivatives business.

The fund will aim to contribute to the emirate's "strategic priorities and endorsed public policies" by investing in initiatives across vital economic and social sectors, while diversifying income sources.

Dubai has earmarked Dh246.6 billion for spending from 2024 to 2026, as part of its latest budget announced last month.

The emirate expects to record public revenue of Dh90.6 billion next year, of which Dh85.1 billion has been allocated to the budget and Dh5.5 billion to the general reserve.

Overall, the general reserve from annual revenue is set to reach about Dh20.6 billion for the three-year period, the Department of Finance said at the time.

It expects to achieve an operating surplus of up to 3.3 per cent of Dubai’s gross domestic product under the 2024-2026 financial plan.

The budget plan reflects Dubai's fast economic recovery and boosts its ambitions to stimulate the macroeconomy and support the objectives of the Dubai Strategic Plan 2030 development project, as well as the Dubai Economic Agenda D33, the media office said at the time.

All relevant public entities in Dubai must register all their assets, stocks, shares, movable and immovable properties, licences, permits, bonds, privileges and other instruments under the new fund.

Dubai World will also be affiliated with the Dubai Investment Fund, while preserving its legal identity.

The fund's board members include Abdulrahman Al Saleh, who will serve as the vice chairman, as well as Abdulaziz Al Mulla, Rashid Ali bin Obood and Ahmad Ali Meftah.

The Council has approved the appointment of Abdulaziz Al Mulla as the managing director and chief executive of the fund.

Under the law, the fund is "obligated" to be transparent in conducting activities and operations and is mandated to make data and information accessible to the public, the media office said.