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The hunter has become the hunted. Dubai ports operator DP World caused a political storm in 2006 when it bought British rival P&O for almost £4 billion. Now private-equity investors are circling DP World, which has seen its stock-market value plummet in recent months.
Here's what we know. Last Thursday, shares of DP World jumped 15% before the Nasdaq Dubai stock market suspended them. On Sunday (following the Arab weekend), DP World announced that a private-equity firm was mulling a minority stake in the company.
Here's the speculation. Every news agency under the Arabian sun reports that the suitor is Abraaj Capital, the region's biggest private-equity firm, with a $6 billion portfolio (Deutsche Bank is a shareholder in Abraaj and Ashok Aram, who works for Deutsche in London, sits on the board). The consensus in the bars and coffee shops around Dubai's financial centre is that Abraaj is after a 15% stake, which at current values would cost about $1 billion.
The move is significant for a couple of reasons. First, private-equity firms have rarely flexed their muscles on local bourses until now. The kind of public-to-private buyouts that were so common in London and New York until 2007 are virtually unheard of in this part of the world. If this becomes a trend, it could signal welcome relief for battered Middle Eastern markets.
Second, the Dubai government still owns 77% of DP World, even after selling shares to the public to help fund that P&O transaction.
Privatisation isn't new to the region, but typically it's a form of wealth distribution (governments sell shares to citizens at a knockdown price, who then flip them for a tidy profit). Raising cash from cold, hard private-equity bruisers is altogether unprecedented, but there may be more to come. This week KKR announced that it had set up shop in Dubai.
* British construction companies aren't the only ones struggling for payment on big-ticket projects in Dubai, after the city's property bubble burst. Lord Mandelson raised the issue with political leaders during a recent official visit. This week local contractor Arabtec said it too is chasing late payments, of almost $1 billion. It says 80% is due from Dubai government-backed firms.
* Budget airline Air Arabia is bucking the downward trend among international carriers, reporting a 32% increase in first-quarter profit. Some passengers are downgrading from premium carriers such as Emirates to Air Arabia, which operates from the low-cost Sharjah airport, just a 30-minute drive away. Last week Air Arabia launched flights from London Stansted to its second hub in Morocco.
