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Sunday, 19 April 2009

Oman Corporate Profitability – 2008 Report (PDF)

New $10 bln Islamic bank to launch $3 bln IPO -bankers (Update from 1st April story)

Gulf investors are launching a new $10 billion Islamic bank and plan a $3 billion initial public offering in the fourth quarter to tap interest in sharia-compliant institutions, bank executives said on Sunday.

Adnan Ahmed Yousif, chairman of the Union of Arab Banks told Reuters on the sidelines of a banking conference in Dubai the new bank was in the "final stages" of establishing its founding shareholders and would be formed by the end of 2009.

Demand from the world's 1.3 billion Muslims for investments that comply with their beliefs has soared, and assets that comply with Islamic law are estimated at between $700 million $1 trillion.

UAE co's rumoured Textron-buy plans worries Israel

The rumoured buyout of Textron, the world's largest maker of business jets by a UAE-Kuwaiti conglomerate has caused concerns in Israel.

A few days back, the Kuwaiti Al Watan newspaper had said in an unsourced report that a UAE-led consortium is interested in Textron's civil industries and planned to sell off the defence operations to a US company. However, the newspaper did not disclose the consortium members.

Textron's operations have been hit by the global financial crisis but its shares have been climbing on rumours of a takeover, which have largely centred on US aircraft maker Lockheed Martin.

Global's Egypt Weekly Market Report - April 16, 2009 (PDF)

Stiff regulations could hamper the growth of financial sector

As governments across the world bail out companies and institutions, there is a consensus on the need for stronger regulations and new governance to lead the global financial market.

However, this could lead to over-regulations, which would mean the end of free markets. Having stayed on the one end (absolutely free-markets), the pendulum is now moving to the other extreme end (heavy government control), and this, experts believe could stifle growth and innovation in the financial services industry.

Most taxpayers, who currently view entities like AIG the biggest monsters of modern times, see governments as their saviours. True, the excesses of the markets lead us to recession but a full control of the state can be detrimental.

Shortage of Shariah-compliant realty financing in UAE

There is a shortage of Shariah-compliant real estate financing in the market as Amlak and Tamweel are not lending because of the liquidity crisis, say real estate experts.

"Islamic funds for developers and end-user property purchasers have become scarce with the two Islamic institutions not providing funding," said Sohail Zubairi, CEO of Dar Al Sharia Legal & Financial Consultancy, a subsidiary of Dubai Islamic Bank.

"This is forcing those in need of funding to approach Islamic banks for whom real estate financing has never been a core activity in the same way it was for Amlak and Tamweel."

Private equity funds have troubles of their own

If recent stock market rises give the impression the worst of the financial crisis may be over, get ready for more possible shocks. This time, however, the potential for a fresh crisis comes from the private equity world. Just like hedge funds, private equity epitomised the excesses of the boom years. And the implications for the Gulf can be serious because private equity funds were popular for a while among some investors and institutions in the region.

In essence, private equity firms buy companies using high levels of debt. Sometimes, the executives would also use the borrowed money to pay themselves hefty bonuses. Some may have taken profits from the companies they bought to repay the debt. That is good. Others might also have injected some of the borrowed money into the purchased firms. That can be good, too. The point is, it works in different ways, except for one thing: in all cases, it involves borrowed money loaded on to the leveraged firms that are acquired. Some leveraged buyouts carry debt of 20 times the firm’s annual profits, which is not a healthy sign even in good times.

For investors in the private equity funds, there is another issue. If they, too, had borrowed heavily to participate in the funds, they would find it difficult to liquidate assets in a distressed market to service their debt. But if they didn’t, there is at least one less worry.

CITYCENTER: MGM Mirage, Dubai World say they intend to complete project

MGM Mirage granted second waiver from lenders

Events surrounding financially troubled MGM Mirage are fast becoming the gaming industry's biggest soap opera.

On Friday, hours after the company made a $70 million equity payment to keep construction work continuing on the massive CityCenter development, word surfaced that MGM Mirage and its feuding joint venture partner, Dubai World, had reached an agreement to complete the $8.7 billion Strip project.

Representatives of both MGM Mirage and Dubai World, however, backed away from saying a deal was complete. Both sides said talks are continuing toward a plan to fund the completion of CityCenter.