Government owned company
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Dubai World
(
Arabic
:
??? ????????
) is an
investment company
that manages and supervises a portfolio of businesses and projects for the
Government of Dubai
across a wide range of industry segments and projects that promote
Dubai
as a hub for commerce and trading. As a subsidiary of
Dubai Inc.
, it is the emirate's flag bearer in global investments and has a central role in the direction of Dubai's economy. Assets include
DP World
, which caused considerable controversy when trying to take over six US ports, its property arm, Nakheel, which built
The Palm Islands
and
The World
developments, and
Istithmar World
, its investment company.
Ahmed bin Saeed Al Maktoum
chairs it.
History
[
edit
]
Dubai World was established under a decree ratified on 2 March 2006 by
Sheikh
Mohammed bin Rashid Al Maktoum
, Ruler of
Dubai
. He is also the majority stakeholder in Dubai World.
[
citation needed
]
On 2 July 2006, it was launched as a
holding company
with more than 50,000 employees in over 100 global cities.
[
citation needed
]
The group now has extensive real estate investments in the United States, the
United Kingdom
and South Africa. Dubai World made headlines in March 2008 after its chairman, Sultan Ahmed bin Sulayem, threatened to take the fund's money out of Europe.
[1]
Dubai World's threats came shortly after the
European Union
attempted to lay out "a set of principles for transparency, predictability and accountability" for
sovereign wealth funds
.
[2]
On 26 November 2009, Dubai World proposed to delay repayment of its debt,
[3]
which raised the risk of the largest government default since the
Argentine debt restructuring
in 2001. Dubai World, the investment vehicle for the emirate, asked to delay for six months payment on $26 billion of debt.
[4]
[5]
[6]
The extent of the debt rattled many markets causing many indices to drop; including oil prices. U.S. stocks fell sharply but rebounded from their lows as investors concluded that the damage might be contained. The Dow Jones industrial average lost about 155 points, or roughly 1.5 percent, in a shortened trading day, and other stock averages also sank. Oil prices plunged as much as 7 percent before recovering some ground later in the day.
On 12 December 2010, Dubai named
Sheikh
Ahmed bin Saeed Al Maktoum
, head of
Emirates
airline and uncle of the state's ruler, as chairman of Dubai World
[7]
in a board revamp a year after the company said it would halt loan repayments, roiling markets. He replaced
Sultan Ahmed bin Sulayem
.
Andrew (Andy) Watson, has been serving as the managing director at Dubai World since July 2011.
[8]
On 29 January 2013, Drydocks World signed a memorandum of understanding for a US$2.5 billion joint venture partnership with
Indonesia
to develop a maritime cluster in the Asian country that would serve, among others, the petrochemicals industry.
[9]
In March 2022, its subsidiary DP World's
P&O Ferries
division
sacked 800 longstanding crewmembers and caused backlash in the United Kingdom
, potentially putting the tax status of DP World's London and Southampton
free ports
at risk.
[10]
2009 debt standstill
[
edit
]
With the onset of the
financial crisis of 2007?2010
, Dubai's real estate market declined after a six-year boom. On 25 November 2009, the Dubai government announced that the company "intends to ask all providers of financing to Dubai World to 'standstill'
[11]
and extend
maturities
until at least 30 May 2010".
[12]
The company has laid off 10,500 employees worldwide.
[13]
At that time, Dubai World had debts of $59-billion, accounting for nearly three-quarters of the emirate's US$80-billion debt.
[14]
This includes a US$3.5-billion loan which the company was unable to repay by its December deadline.
[15]
In response to the government announced moratorium of Dubai World's debts, both
Moody's
and
Standard & Poor
's Investors Services heavily downgraded the debt of various Dubai government-related entities with interests in property, utilities, commercial operations and commodities trading. In Moody's case, the downgrade meant that the affected agencies lost their investment grade status.
[16]
Concerns over the fallout from Dubai's debt problems contributed to the main European stock indexes falling over 3% on 26 November. This was followed by drops in Asian stocks on 27 November. However the European stock markets rebounded as investors' fears subsequently subsided as they decided the estimated debt wasn't big enough to trigger a systemic failure in global financial markets. "For now, the market is taking the view that the Dubai debt issue may be a storm rather than a hurricane," said Jane Foley, a research director at Forex.com in London.
[17]
[18]
[19]
[20]
The American markets were closed on 26 November but American stocks fell on the afternoon of 27 November as similar fears rattled
Wall Street
in a thinly-traded half-day session. The
Dow Jones Industrial Average
(INDU) fell 155 points, or 1.5%, after closing 25 November at a 13-month high. The Dow had lost 233 points in the morning.
[21]
Also, concerns of the crisis led to a sharp rally in the U.S. dollar and
Japanese Yen
against most other world currencies as these currencies had been perceived as
"safe haven" currencies
during times of uncertainty.
[22]
An unnamed senior official told news agencies on 28 November that
Abu Dhabi
, the wealthy capital of the
United Arab Emirates
, would "pick and choose" how to assist Dubai World. "We will look at Dubai's commitments and approach them on a case-by-case basis," the official told the
Reuters
news agency by telephone, adding: "It does not mean that Abu Dhabi will underwrite all of their debts." Meanwhile,
India
's
central bank
governor said an assessment of the impact of Dubai's debt problems was needed before deciding on a response. "We should not react to instant news like this. One lesson of the crisis is that we must study the developments, and I think we must measure the extent of the problem there and how it impacts India,"
Duvvuri Subbarao
said in
Hyderabad
, India.
[23]
A public statement on 30 November 2009, of the Dubai Finance Department Director-General, that the Dubai World debts are
"not guaranteed by the government"
appears to correctly reflect the legal position, as the Dubai Government were not required by the lenders, and nor did they provide, any contractual guarantees in respect of the Dubai World debt:
Officials in the United Arab Emirates tried on 1 December to calm investors and the public over the Dubai World debt crisis, and the company itself said it was seeking to renegotiate only the $26 billion in obligations held by its troubled real estate developer,
Nakheel
. It also said that it had hired
Moelis & Company
, the investment boutique headed by
Ken Moelis
, a former
UBS
banker, to be its adviser.
Rothschild
is also advising Dubai World. Shares in Dubai and Abu Dhabi were down for a second day, with both key indexes declining about 6%. On 30 November, shares dropped in Dubai and Abu Dhabi by 7.3% and 8.3%, respectively.
[24]
On 14 December 2009 the Dubai government received $10 billion in surprise aid from Abu Dhabi for debt-laden Dubai World, which said it would use $4.1 billion of it to repay its Nakheel unit's Islamic bond maturing on the same day.
[25]
As of 24 January 2010 Dubai World's property assets have exceeded US$120 billion, so that it could cover its debt of US$57 billion.
[26]
Debt deal
[
edit
]
Dubai World on 20 May 2010 said that it had reached an agreement "in principle" with most of its bank lenders to restructure debt worth $23.5bn (£16.4bn). It would be left with debts of $14.4bn after the restructuring. But the deal must still be approved by other banks that were not involved in the negotiations. The terms of the restructuring, include converting $8.9bn of government debt into equity. The government of
Dubai
and Dubai World had tabled this offer to bank lenders in March 2010 after three months of negotiations.
[27]
Managed companies
[
edit
]
References
[
edit
]
- ^
Prosser, David (1 March 2008).
"Head of Dubai World threatens to take his money out of Europe"
. London.
The Independent
. Retrieved
26 November
2009
.
- ^
O'Grady, Sean (26 February 2008).
"EU to agree code of principles for sovereign wealth funds"
. London.
The Independent
. Retrieved
26 November
2009
.
[
dead link
]
- ^
"Dubai distances itself from $63bn debts"
.
MEED
. 27 November 2009
. Retrieved
27 November
2009
.
- ^
"Dubai World to ask for more time to pay debts"
.
MEED
. 25 November 2009
. Retrieved
25 November
2009
.
- ^
Cochrane, Laura; Harif, Tal Barak (26 November 2009).
"Dubai Debt Delay Rattles Confidence in Gulf Borrowers (Update3)"
. Bloomberg News
. Retrieved
26 November
2009
.
- ^
"Press Release: Statement from Dubai World"
(PDF)
. NASDAQ Dubai. 30 November 2009. Archived from
the original
(PDF)
on 14 July 2011
. Retrieved
3 December
2009
.
- ^
Sharif, Arif; Hall, Camilla (13 December 2010).
"Dubai World Overhauled With Emirates Chairman as Chief After Debt Debacle"
.
Bloomberg
.
- ^
"Executive Profile"
. Bloonberg Business Week.
[
dead link
]
- ^
"Dubai Drydocks signs $2.5b Indonesia deal"
. Investvine.com. 3 February 2013. Archived from
the original
on 13 April 2019
. Retrieved
20 February
2013
.
- ^
Armitage, Jim; Arlidge, John; Hellen, Nicholas; Al-Othman, Hannah (19 March 2022).
"Bungs, handcuffs and foreign job ads: inside story of the P&O sackings"
.
The Times
.
- ^
"Nakheel discusses $3.5bn repayment with Dubai World"
.
MEED
. 11 November 2009
. Retrieved
11 November
2009
.
- ^
Hall, Camilla (25 November 2009).
"Dubai Government Statements on Nakheel, $5 Billion Bond (Text)"
.
Bloomberg
. Retrieved
26 November
2009
.
- ^
Twin, Alexandra (30 November 2009).
"Dubai World axes 10,500 jobs (Text)"
.
MEED
. Retrieved
30 November
2009
.
- ^
Smith, Matt; Kiwan, Enjy (25 November 2009).
"Dubai seeks debt delay, some units cut to junk"
.
Reuters
. Retrieved
26 November
2009
.
- ^
"Dubai announces debt payment delay"
.
BBC
. 26 November 2009
. Retrieved
26 November
2009
.
- ^
Watts, William L. (26 November 2009).
"Dubai woes roil financial markets: Stocks fall and government bonds rise on flight to quality"
.
MarketWatch
. Retrieved
26 November
2009
.
- ^
Alves, Fabio (27 November 2009).
"WORLD FOREX: Dollar Trims Gains As Dubai Fears Subside"
.
WSJ.com
. Archived from
the original
on 1 December 2009
. Retrieved
28 November
2009
.
- ^
Raja, Shani (28 November 2009).
"Asia Stocks Drop for Second Week on Dubai, Share Sale Concerns"
. Bloomberg News
. Retrieved
28 November
2009
.
- ^
Pylas, Pan (27 November 2009).
"Dubai woes hit world stocks again; Asia down most"
.
Associated Press
. Retrieved
27 November
2009
.
[
dead link
]
- ^
"European stocks rebound as Dubai worries abate"
.
The Sydney Morning Herald
. 28 November 2009
. Retrieved
28 November
2009
.
- ^
Twin, Alexandra (27 November 2009).
"Stocks slip on Dubai debt woes"
.
CNNMoney.com
. Retrieved
27 November
2009
.
- ^
Mandaro, Laura; Watts, William L. (27 November 2009).
"Dollar propelled higher by Dubai worries"
.
MarketWatch
. Retrieved
27 November
2009
.
- ^
"Abu Dhabi to 'assist' Dubai World"
.
aljazeera.net
. 28 November 2009
. Retrieved
28 November
2009
.
- ^
"Dubai World Says Debt Negotiations Only Cover Nakheel"
.
NYTimes.com
. 1 December 2009
. Retrieved
1 December
2009
.
- ^
"TRANSCRIPT-Abu Dhabi gives Dubai $10 bln bailout"
. Finanznachrichten.de. 14 December 2009
. Retrieved
23 April
2015
.
- ^
"Dubai World's property assets exceed $120bn - Real Estate"
. ArabianBusiness.com. 24 January 2010. Archived from
the original
on 27 January 2010
. Retrieved
23 April
2015
.
- ^
Ben Thompson (20 May 2010).
"Dubai World agrees debt deal with key banks"
.
BBC News
. News.bbc.co.uk
. Retrieved
23 April
2015
.
- ^
a
b
c
d
"Dubai World"
.
Craft
. Retrieved
11 August
2023
.
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