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Friday, 16 October 2009

Etisalat to buy Millicom's Sri Lanka ops

Luxembourg-based Millicom said Friday it had agreed to sell its Sri Lankan mobile operations to Emirates Telecommunications for 155 million dollars, completing a divestment programme.

Millicom International Cellular said the sale of its Sri Lankan cellular operations, the country's third-largest, to Emirates Telecommunications Corp, or Etisalat, was expected to be completed by October 20.

"We are very pleased to have agreed to sell our Sri Lanka operations to Etisalat," Millicom CEO Mikaek Grahne said in a statement posted on Millicom's website.

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Abu Dhabi debt in demand

Abu Dhabi, one of the world’s richest states, is rapidly emerging as the debt capital of the region, producing a flurry of multi-billion dollar bond sales.

Abu Dhabi’s government was the first this year to tap the international debt markets in April, which established a fresh yield curve to ease pricing, and triggered a flood of issuance from state-linked entities. The emirate and its companies have issued more than $12bn of bonds in 2009, and bankers say billions more are in the pipeline.

Thus far, investor appetite seems undeterred by the size and frequency of bond sales coming out of the emirate.
(Delayed posting)

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Nomura gives grim property outlook

Office complexes set to open in Abu Dhabi and Dubai over the next two years will be seeking occupants in an oversaturated commercial real estate market and 150,000 workers to staff those businesses from a declining population, analysts say.

The Japanese bank Nomura Holdings predicted some 20 million square feet (1.9 million square metres) of commercial space will be completed in Dubai by 2011 along with 10 million sq ft in Abu Dhabi.

“We estimate around 100,000 white-collar jobs at least would need to be created in Dubai and 50,000 in Abu Dhabi alone to satisfy oncoming supply,” said Chet Riley, a Dubai-based analyst at Nomura. “This is in an environment where jobs are being cut.”

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Abu Dhabi stocks at 11-month high

Abu Dhabi stocks advanced to an 11-month high yesterday as oil hit US$76 a barrel and after an overnight rally in the US saw the Dow break the 10,000 barrier for the first time this year.

Most Gulf markets rose following US stock market gains on Wednesday that sent the Dow Jones Industrial Average Index above 10,000 for the first time in a year on better than estimated earnings at JPMorgan Chase and Intel.

The rally boosted investor confidence that the global economy is slowly emerging from recession.

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DW takes debt challenge seriously

If Dubai World (DW) had a share price, it would probably have reacted positively to news that the debt-laden conglomerate was shedding thousands of jobs around the world as part of its near complete global restructuring.

Cutting the workforce on such a massive scale, especially in still suffering Dubai, is a clear sign that DW is taking its challenges seriously. The human cost of the jobs cuts, and the multiplier effect of the removal of thousands of jobs from the local economy, were doubtless outside the brief.

As an exercise in corporate restructuring, it all makes sense. Nakheel becomes almost exclusively a property developer, and Istithmar an investment and asset management business – both rather more in tune with the times than the “global vision” merchants of before.

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Bank's board ignored fraud, chief says

Dubai Islamic Bank’s chief executive testified in the Criminal Courts yesterday that the bank’s board of directors were “indifferent” when findings of fraud were brought to them in 2007.

Abdullah al Hamli told Judge Hamad Abdel Latif that no immediate action was taken on the allegations. Seven people are charged in the case, two of whom are former employees of the bank. All have pleaded not guilty.

“I was present when the findings of the fraud claims were presented to the board of directors,” Mr al Hamli said.

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Bird and Fortune in the FT boardroom

US readers may not be familiar with the brilliantly satirical comedy of the Johns Bird and Fortune, but those based in the UK will know them from Channel Four.

The Two Johns and their co-conspirator Rory Bremner have skewered a range of topics, including Washington diplomats and the war in Iraq. Most recently, they took on the subprime crisis and provided a guide to understanding the financial crisis.

On Thursday, they popped up at the FT with their take on the boom, the bust, the bankers and the bonuses, and Lehman (”Dick made a very fundamental strategic mistake, in that never in his whole career did he work for Goldman Sachs”).

Click on the link for the video:

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Bank revises price targets for UAE firms

Nomura upgraded targets on property firms in the UAE yesterday in the expectation the stabilising property market would pull stock prices out of their troughs faster than originally anticipated.

Nomura upgraded price targets of Aldar, Deyaar Development, Emaar Properties, Ras Al Khaimah Properties, Sorouh Real Estate and Union Properties.

Easing liquidity conditions following reports about the upcoming $10 billion Dubai government bond programme, also boosted optimism, the bank said, adding that likely defaults of some private property developers might open the door for "vulture" investment in distressed assets.

"We forecast stabilisation in the secondary property markets, which we are now starting to observe. In line with our original thesis, we upgrade our target prices based on where we think we are in the cycle," Nomura's equity strategist Chet Riley, said in a note to clients.END

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Transparency vital for family businesses

Shock waves emanating from the financial troubles of two prominent Saudi family businesses, Saad Group and Ahmed Hamad Al Gosaibi Group, are resonating in boardrooms throughout the region. While the majority of family conglomerates are well managed and properly capitalised, all of them are now under pressure to become more open and transparent and to put in place corporate governance in line with best practice. Without embracing the necessary structural changes, they may find it difficult to thrive in the post-crisis marketplace.

Privately held companies are the backbone of Middle Eastern economies. They are involved in diverse economic activities and account for the bulk of private sector GDP. Yet for all their importance, they have so far been operating without providing much transparency. The average level of financial disclosure is so poor that one rating agency has admitted it was not aware of the problems at Saad Group until 24 hours before it downgraded it to junk status.

Until the troubles emerged at the Saudi groups early this summer, family businesses had been viewed as safe and reliable borrowers. Most of them are still in good shape, and few have made risky investments financed by excessive leverage, but the well-known practice of “name lending” based on reputation has now been severely undermined. Banks are becoming more cautious, asking for more transparency and more collateral, and some are withdrawing lines to certain conglomerates.

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Sainsbury up on bid rumours

Revived takeover speculation gave shares in UK supermarket retailer J Sainsbury their biggest gain in more than two years . The shares surged by nearly 20% in London in mid-session on speculation that the Qatari Investment Authority had made a second approach to the Sainsbury family trust. Qatari’s sovereign wealth fund holds about 26% of Sainsbury and has been widely rumoured to be reviewing options for the stake, having had a 600p bid rejected in 2007.

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