Friday, September 11, 2009

Istithmar going bankrupt?

Dubai World logoImage via Wikipedia





From Hero to Zero. Another one. One of the worlds major property developers and part owner of Cape Town's V&A Waterfront is under water. Prepare for the worst. We read in Bloomberg:
“Istithmar is in serious trouble,” said Rochdi Younsi, head of Middle East research at New York-based Eurasia Group. “At Istithmar, there’s a feeling that jobs aren’t secure and it wouldn’t be a surprise if the firm just disappeared.”






Major shareholder V&A Waterfront bankrupt?


Istithmar Said to Halt Investment; Dubai Weighs Sale

Bloomberg

Sept. 11 (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.

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.

“They need to decide whether to keep Istithmar as a sovereign wealth fund or to clip its wings, roll it up and have it cease to exist independently,” said Victoria Barbary, a senior analyst at Monitor Group in London. “With Dubai World’s broader problems, it would not be surprising if Istithmar was rolled up.”

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.

Debt Load

Winding down Istithmar may help Dubai reduce its debt load, the people said.

“There are no plans to merge IW,” Abdelaziz Al Mazam, head of marketing and public relations at Istithmar World, said in an e-mail. “IW is one of Dubai World’s key subsidiaries, actively managing a portfolio of investments worldwide, and will continue to be a key subsidiary into the future.”

Istithmar spent more than $25 billion on investments this decade, according to the Monitor-FEEM SWF transaction database. Among its investments are Yacht Haven Grande, a marina complex in the Caribbean, the W Hotel Union Square in New York and GLG Partners Inc., a hedge fund that has lost more than 61 percent of its value since the deal was announced in June 2007.

“Istithmar is in serious trouble,” said Rochdi Younsi, head of Middle East research at New York-based Eurasia Group. “At Istithmar, there’s a feeling that jobs aren’t secure and it wouldn’t be a surprise if the firm just disappeared.”


No comments:

Post a Comment