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Saturday, 15 August 2009

Qatar takes key VW-Porsche stake

Porsche SEImage via Wikipedia

Porsche is to sell a 10 per cent voting stake to Qatar Holding LLC as a way to prop up its strained finances, marking a climbdown for a predator that had once sought to dominate Volkswagen.

Qatar Prime Minister Shaikh Hamad Bin Jasem Bin Jaber Al Thani signed the agreement just 24 hours after VW sealed a deal with the iconic German sports carmaker Porsche to merge the two auto manufacturers.

Porsche is selling a 42 per cent stake in Porsche AG for about 3.3 billion euros ($4.7 billion) and also sold a package of cash-settled options on VW shares to Qatar which the company said would free up 1 billion euros in cash for Porsche.

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Aircraft maintenance plan wins OK

The European Commission yesterday approved a joint venture between Mubadala Development Company and the US-based United Technologies Corporation on a military aircraft maintenance business in Abu Dhabi.

The regulatory approval helps pave the way for Mubadala, the strategic investment arm of the Abu Dhabi Government, to develop a home-grown aerospace industry that will take aim at customers throughout the region.

The joint venture will seek to tap into a regional market worth as much as US$4 billion (Dh14.7bn) per year to service fixed-wing and rotorcraft operated by regional air forces, including the F-16 fighter jet and Black Hawk helicopters.

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FSF pointers for the ‘majidologists’

For those who watch the manoeuverings of the senior levels of Dubai Inc – “majidologists”, I like to call them – there is much to mull over in last week’s appointment of a permanent board to oversee the emirate’s response to the global financial crisis.

The naming of a six-man team to oversee the disbursement of cash from the Financial Support Fund (FSF) clarifies Dubai’s recovery strategy, and gives intriguing hints at the shifting power structure at the highest levels of the Ruler’s court, which in turn reflects the new priorities and imperatives of the emirate.

The task is to manage the allocation of the fund’s resources. “The new board’s primary duty will be to prepare and adopt the criteria to be used in the allocation of funds for Dubai’s strategic revenue-generating projects,” said the chairman, Abdul Rahman al Saleh.

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Dubai: Was the Desert Miracle a Mirage?

According to a British publication in February, more than 3,000 cars sit abandoned by foreigners in the parking lot at Dubai's airport. Based on this report, the world press has been quick to report the emirate's collapse. Some of the more pessimistic have gone as far as to state that the miracle of the desert is now practically a ghost city.

Yes, Dubai is in trouble, but the situation is not that dire. Examination of the airport's parking lot reveals the total number of cars deserted in the past year to be only 11. The city was alive and well in February and March, as active as any other international center, and it hosted many events, including the Rugby World Cup, the Dubai Tennis Championships, the International Poetry Festival, Desert Rock Festival, and the International Advertising Festival.

But aggressive investment in the past four to five years has driven its total debt to US$74 billion. That seems particularly huge given the small size of the city state, which has a population of 1.5 million, and the US$10 billion bailout package from Abu Dhabi and others. There are reports of unemployment exceeding 80 percent, mostly driven by foreigners. It is true that the majority of development projects have been halted and the number of visitors has dropped significantly. But who hasn't been hit by the financial crisis?

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Dubai's next US$10 billion bond may attract wealth funds, central bank, says UBS

Dubai will have to rely on a “club deal” with regional sovereign wealth funds, the United Arab Emirates’ central bank and international investors to raise US$10 billion in a bond issue, Bloomberg reported citing a UBS official.

Dubai plans to raise the second half of its US$20 billion bond program before the end of the year. The first US$10 billion was raised by selling bonds to the U.A.E.’s central bank in February.

“The reality is that Dubai doesn’t have a credit rating yet,” London-based James Sadler, head of Middle East and Africa debt capital markets at Switzerland’s largest bank, said in an interview with Bloomberg.

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