Forced stock sale at Damas

Qatari conglomerate and an Egyptian investment bank plan to force remaining minority shareholders of Damas International to sell their stock as theentities buying the troubled UAE jeweller prepare to delist it.

Mannai Corporation and EFG-Hermes announced their intention to start a "squeeze out" via a statement on Nasdaq Dubai after receiving acceptance from holders of more than 90 per cent of the company's share capital.

The move would force through the acquisition of the remaining shares at their offer of 45 US cents, valuing the company at about US$445 million (Dh1.63 billion). Those holding out have until June 7 to accept the bid.

"We are very pleased to have reached this important milestone," said Alekh Grewal, the chief executive of Mannai Corporation.

The jeweller's problems began after the company went public. The Abdullah brothers Tawfique, Tawhid and Tamjid, the company's owners when it was a private entity, made huge unauthorised withdrawals of assets from the now-public company that pushed it to the brink of financial ruin.

The brothers were disciplined by the regulator of the Dubai International Financial Centre in March 2010, and they still owe the company money.

Analysts say that Damas was not brought down by any weakness in its jewellery business but by getting into property, an area in which it had no prior experience, along with other issues, and that the company will benefit from synergies with Mannai's retail outlets. The Qatari conglomerate will take a 66 per cent stake in Damas; EFG-Hermes will own 19 per cent and the Abdullah brothers will retain 15 per cent.

The company is to be delisted from the Nasdaq Dubai when the takeover is complete.

News of the forcible takeover of the remaining minority shares comes after it was revealed last week that a long-standing arrangement between the New York jeweller Tiffany & Co and Damas had been scaled back.

All operations, marketing and sales functions for Tiffany in the Emirates will now be the responsibility of Tiffany itself.

gduncan@thenational.ae

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More than 2.2 million Indian tourists arrived in UAE in 2023
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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(Yale University Press)

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Skewed figures

In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.

At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances