Emirate could list its 'crown jewels'

Stock offerings or asset sales could follow a recovery in valuations over one to three years

Sameer Al Ansari, the chief executive of Shuaa Capital, said valuations are likely to stay depressed for up to three years. Jeffrey E Biteng / The National

DUBAI // The chief of the country's biggest investment bank says it would make sense for Dubai to sell stakes in some of its "crown jewel" investments once valuations improve. But it could take up to three years for those prices to recover, said Sameer al Ansari, the chief executive of Shuaa Capital.

"If we talk about the Government of Dubai, there are several well-known companies that qualify to be crown jewels," Mr al Ansari said. "At some stage it would make sense for the government to [make an initial public offering of stock in] some of the portfolio companies. I would expect the float not to be a large one, 15 or 20 per cent maybe." But he said he did not expect any moves in immediate future.

"There isn't a need for them to be on the market now," Mr al Ansari said. "You will only sell the crown jewels if either you absolutely needed to or you are getting the right valuations, so I don't see them [Dubai Government ] wanting to sell any of them for the time being." Dubai is estimated to have total debts of more than US$107 billion (Dh392.69bn), equal to 136 per cent of its GDP, according to the Institute of International Finance.

Analysts have suggested Dubai sell assets of government-owned firms or offer stakes in profit-making entities such as Emirates Airline to raise funds and lighten its debt burden. Mr al Ansari said the current depressed valuations meant that it could take between one and three years to float some "very profitable, very well managed" companies. Abraaj Capital, one of the biggest private equity companies in the Middle East, has expressed interest in buying assets of the Dubai World subsidiary DP World, the global ports operator.

Mustafa Abdel-Wadood, the managing director of Abraaj, told Bloomberg TV yesterday that DP World's assets were "solid" and "attractive". Abraaj would only pursue the DP World assets if there was "willingness from the other side", Mr Abdel-Wadood said. He declined to comment further on the sidelines of the MENASA Forum in Dubai yesterday. Sheikh Ahmed bin Saeed Al Maktoum, the chairman of Dubai's Supreme Fiscal Committee, said the UAE planned to establish a federal debt management office to regulate borrowings of government-related entities in order to prepare for the future and address the vulnerabilities of the financial system.

A similar debt management unit is also planned to be set up in Dubai to centralise the decision-making on debt, Sheikh Ahmed told the conference on Sunday evening. [e-mail]