Friday, September 11, 2009

More Bad News For Dubai ......

Time for another update from Dubai...... Compared to The Upcoming Skyscraper Tsunami the rotten performance of their SWF is only a minor problem...... But it seems that almost everything Dubai pushed forward during the past few years is running into trouble...... Clearly a poster child for the bubble years......

Es ist mal wieder Zeit für ein Update aus dem vermeintlichen Wunderland Dubai....... Sieht so als fast alles was die dort anfassen wirklich nur auf Sand gebaut ist...... Verglichen mit dem Upcoming Skyscraper Tsunami ist die lausige Performance des SWF wohl aber nur ein winziges Problem...... Dubai ist sicher das Paradebeispiel für die Bubble Jahre. Was hier an Gigantismuß in den Wüstensand bzw. auf künstlichen Inseln versenkt worden sprengt wirklich jeden Rahmen......
IMAGE Istithmar Said to Halt Investment; Dubai Weighs Sale (Bloomberg)
Istithmar World, the Dubai sovereign wealth fund, is halting investments as part of a restructuring effort after spending more than $25 billion this decade on stakes ranging from a yacht marina to luxury retailer Barneys New York, according to people familiar with the plan.

> I just couldn´t resist.... via Istithmar World

> Konnte hier einfach nicht widerstehen.... via Istithmar World

Retail Deal of the Year for 2007 for acquisition of Barneys New York (2007) Investment Dealers Digest

Istithmar World Capital Announces Additional Capital Support For Barneys New York 2009

"Istithmar World Capital has provided a significant level of additional capital to support Barneys New York. Working closely with management, we believe that this amount allows the company financial flexibility to work with the company's major vendors and financial intermediaries.

> With deals like this no wonder Istithmar has won several awards..... ;-)

> Dank solch gelungener Deals ist es kein Wunder das Istithmar mit Preisen überhäuft worden ist.... ;-)

Best Private Equity House (2008) Banker Middle East

Best Private Equity House Award (2007) Banker Middle East

> Surprising to see that the WHITE ELEFANT MGM City Center in Vegas didn´t win a special award..... Update: Video City Center

> Fast überraschend zu sehen das die wohl größte Fehlleistung das MGM City Center in Vegas nicht auch noch einen Sonderpreis abgeräumt hat..... Update: Video City Center

> Back to Bloomberg....

The process may result in a sale of the fund or its assets, they said. Istithmar, run by David Jackson, said this week that co-chief investment officers John Amato and Felix Herlihy would leave the firm. Jackson’s job is under review, the people said.

A restructuring by Istithmar and its parent Dubai World may mark the most public reversal of fortune for a state-controlled investment firm since global credit markets seized up in 2007.

Sovereign wealth funds, fueled in part by oil revenue, have become sources of capital around the world for companies, including Citigroup Inc. and Morgan Stanley.
Istithmar and Dubai World have struggled this year on investments, including Barneys, which may be facing a restructuring or bankruptcy, according to people familiar with the retailer, and CityCenter, an $11 billion project in Las Vegas.
Abu Dhabi, the wealthiest member of the United Arab Emirates, provided a $10 billion bailout this year for Dubai as the emirate struggled to meet payments on $80 billion of debt used to finance real-estate projects. ....

> Won´t be the last time Abu Dhabi will be bailing out Dubai........ What a mess....

> Abu Dhabi darf sich jetzt schon einmal freuen das hier demnächst in regelmäßigen Abständen Bailouts fällig werden.... Sieht immer mehr so aus als wenn hinter den glitzernden Fassaden nur heisse Luft steckt.... Ein gewisses Maß an Schadenfreude kann ich mir da nicht verkneifen.....

UPDATE: Dubai’s Trail of Dud Deals Shows Sovereign Wealth Gone Awry

Dubai investment firm Istithmar World may be the first sovereign wealth fund to liquidate after a $27 billion spending spree financed largely with borrowed money, people briefed on the matter said.

Unlike government-controlled funds in Kuwait and Abu Dhabi, flush with cash from oil production, or in China, backed by export earnings, Istithmar fueled purchases such as the takeover of Barneys New York by borrowing as much as 90 percent of the money, the people said.

Istithmar’s parent, Dubai World, tapped Middle Eastern and European banks including Barclays Plc, Royal Bank of Scotland Group Plc and Deutsche Bank AG, leaving those three with combined debt holdings of at least $1.5 billion, the people said.

“Dubai sovereign wealth funds are leveraged like private equity funds"

Istithmar contributed about $2.5 billion of its own cash to back $27 billion of purchases since 2003, the people said, speaking anonymously because the strategy was private. It used so-called non-recourse bank loans, backed by specific assets, to finance about 75 percent of its acquisitions, one of the people said.

Dubai World is in talks with its creditor banks to restructure at least $12 billion in debt, a person close to the talks said, speaking anonymously because the negotiations are private.

Istithmar or its assets will probably be sold to help its parent repay the debt, the person said. Nakheel PJSC, the Dubai World unit behind a series of palm-shaped, man-made islands on the emirate’s coast, has a $3.52 billion Islamic bond due in December
One example of risky investing, according to Turner, came in 2007, when Dubai World bought about $5.5 billion of MGM Mirage stock at between $82 and $95 without any hedge. The stock now trades at about $12.
Refinancing Dubai’s debt became more difficult with the onset of the global credit crisis as lending froze. It has about $80 billion of outstanding corporate and government debt, according a report by Moody’s in February. That almost matches the emirate’s $82 billion gross domestic product in 2008, the report said.
A Dubai Investment Arm Struggles With Debt Load NYT
Set up in 2003, Istithmar came to be seen as the public face of a brash, acquisitive Dubai, which, unlike more conservative sovereign funds operating in the region, deployed high levels of leverage to finance a shopping spree that included the Queen Elizabeth 2 luxury liner; the department store Barneys New York; a stake in Cirque du Soleil, from Montreal; as well as luxury hotels in New York like the W on Union Square and the Mandarin Oriental on Columbus Circle.

Most of these investments — including that in Perella Weinberg Partners, the investment boutique, and GLG Partners, the asset management company — were done at the top of the market, from 2005 to 2007.

Istithmar was in many respects a scaled-down version of Dubai — using bravado, debt and some dollops of cash to invest in global markets

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