TBY talks to Khalid Bin Kalban, Managing Director & CEO of Dubai Investments, on targets for investment, the improved economic outlook, and the Dubai Investments Park.
TBY How have the recent geopolitical and global economic events affected your operations?
KHALID BIN KALBAN With the economic crisis in 2008, followed by the global recession, and recently the Arab Spring, our businesses have been affected. The financial crisis has delayed our plans for expansion. Most countries that experienced the Arab Spring are our business partners, and we have projects in Libya, Yemen, Syria, and Egypt that have been adversely affected over the last three years. However, Dubai Investments has managed to remain profitable with a high level of liquidity, and we have been able to pay dividends to our shareholders. Even though it has taken a toll on our businesses, I think we have managed to remain robust.
What were some of the key strategies you applied to weather the financial storm?
As an investment company, we always have 30% of our investments available to us in liquid form, which we can tap into if the need arises. This has helped us wade through the financial storms, even when several banks shut down and tried to get help from the government instead of receiving a bail out from the private sector. We command a unique position among other companies that have built their strategies on leverage because at Dubai Investments we have very low leverage ratios. All of our investments are managed conservatively. Now, the situation has reversed and the banks are slowly but steadily opening up. We hope that if we can get that rolling, we will be able to boost our liquidity by investing in some companies in our portfolio.
What are some of your key future targets on the investment side?
We have already started to go back to an open business model. We have borrowed around $200 million, and we are working on borrowing another $350 million to cope with our expansion. We are back in the market. We are returning to our strategy of acquiring new companies, and we have investors who are interested in investing in our portfolio. Additionally, we are performing evaluations and due diligence studies so as to possibly exit from the mature companies in our portfolio. In 2012-2013, we will be back to normal business practices, especially with the Arab Spring more or less settled down. There are still a few countries where the political climate is grim, and we have taken that into account. Also, Dubai’s economy has given us some positive signs and has demonstrated positive trends. The real estate market is recovering and the banks are funding companies and projects. Most companies have solid business plans that are focused on business prospects as opposed to speculation.
What is your outlook for Dubai Investments Park?
The park is one of our most successful projects and has already reached capacity. There are not many opportunities for companies to come in and just lease land. However, if customers have not been able to deliver on their promises or deliver on their lease agreements, the space can be reassigned to other clients. We have been very active over the last year to develop our own activities in the park. For example, we have just completed Phase I of a logistics project in the park. It cost around $80 million and has already been developed and leased. Around 10%-15% of Phase II has also been completed. I think by the middle of 2013 this project will have been completed and leased out. We have built a hospital and leased it to a third party at a cost of around $25 million. We have developed major supermarkets and entered into a 20-year lease with Carrefour. We are also thinking of replicating the park somewhere else and have already received invitations from Libya and Iraq. We are now developing something similar on a smaller scale in Fujairah. We will use our expertise, business plans, and networking tools to build similar facilities in other locations. Some of our clients here have already indicated that if we build another park in another location, they would be happy to invest.
What is your outlook for 2012 for Dubai Investments and the wider economy?
We can see now positive trends from all sectors of the economy, especially from manufacturing exports to other countries. On many occasions, even countries facing political upheaval have invited us to attend conferences and meetings, besides requesting us to come back with our business plans. We are now in the process of setting up agencies and representative offices in various countries, while our sales force is working hard to increase our market share in these countries. We already see positive financial rewards in the first quarter of 2012, and if the trend continues we are on the right track.
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