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Sunday, 10 January 2010

Qatar economy grew 11 percent in 2009: deputy PM | Reuters

Qatar's economy grew 11 percent in 2009, mainly due its natural gas sector, Deputy Prime Minister Abdullah bin Hamad al-Attiyah was quoted as saying on Sunday.

Qatar, the world's largest natural gas exporter, is set to outperform key players in the world's top oil producing region -- Saudi Arabia and the United Arab Emirates -- in coming years due to massive expansion of its gas facilities.

Attiyah, also the energy minister, did not say whether the growth was in real or nominal terms and did not give further detail in comments published on the website of daily Al Watan.

The cash-rich Gulf country was expected to grow 8.0 percent in 2009 and 12.5 percent in real terms this year, a Reuters poll showed, after a 16.4 percent expansion in 2008.

Qatar's policymakers had been expecting gross domestic product to jump 9 percent and 16 percent in fiscal years 2009-10 and 2010-11 respectively. The fiscal year in Qatar, which pegs its currency to the dollar, starts in April.

"Asian emerging economies are lining up for the Qatari gas," said Farah Ahmed Hersi, senior economist at Masraf Al Rayan in Doha. "The economy is pretty robust and it will grow constantly in double digits over the next few years."

Qatar's nominal GDP rose 11 percent in the third quarter compared with the previous three months, but fell 28.3 percent on an annual basis, preliminary estimates from its statistics office showed last month.

The country's four new liquefied natural gas (LNG) plants were expected to double capacity by the end of 2009 in the world's richest nation in per capita income.

Abu Dhabi to Arabtec shareholders: "O Plato o Plom?" Lead or Silver?

Abu Dhabi has made its first offer that Dubai cannot refuse.

On Friday, the weekend in Dubai it was announced that Aabar, an Abu Dhabi government investment vehicle, had agreed with Arabtec to purchase mandatory convertibles for 6.4B AED which, when converted, will give Aabar 70% of the share capital of Arabtec. The conversion ratio implies a price of 2.3AED per share a 20% discount to where the shares closed on Thursday afternoon implying that Aaabar has acquired well more than complete control of the company for a discount from the current owners. Ordinarily current shareholders demand a premium to relinquish control. As a person who specialized in trading options around takeovers this is what in Wall Street merger-arbitrage parlance we call a “take-under.” At least that is how it looks at first glance but as with so much in Dubai one has to look a little deeper to see what substance for the shadow.

Firstly it is important to know what Arabtec is. Arabtec is a construction company in Dubai that was founded in 1975 by Riad Kamal, a London educated engineer and very enterprising Palestinian who founded the company when what we know as Dubai was merely a glimmer in the eye of Sheikh Mohammed. Arabtec became a highly competent subcontractor for the industrial and real estate development projects in Dubai. Take the Burj Dubai/Khalifa for example. Emaar announces a major project raises money through equity, debt, and forward sales of off plan real estate. It then takes that money and hires Arabtec to actually do the building. Emaar is a marketing and development company, the building gets done by Arabtec, and they did a lot of it. Arabtec built such Dubai mega-projects including such wonders familiar to Dubai visitors as Terminal 1 at DXB and the Burj Al Arab, (not to mention such questionable micro projects as the elevators in my old office in the DIFC Gate Village.)

Prince Alwaleed meets Abu Dhabi sheikhs

Saudi billionaire Prince Alwaleed bin Talal has held meetings with senior government officials in Abu Dhabi including powerful royal Sheik Mansour bin Zayed Al Nahyan to discuss "potential business collaboration", a statement from his office said.

The meetings between two of the region's most influential investors took place last week, according to the statement. Prince Alwaleed is one of the largest single investors in Citigroup Inc, which is in dispute with Abu Dhabi over the emirate's investment in the bank.

Prince Alwaleed discussed "local, regional and international economic and investment issues, and future potential business collaboration" and also met with Kaldoon Al Mubarak, who heads Mubadala Development Co, the statement said.

Dubai Index Falls on Concern Arabtec Sale Will Dilute Shares

Dubai shares dropped for the first time in four days, led lower by Arabtec Holding PJSC, on concern the construction company’s stock will be diluted by the sale of a stake to Abu Dhabi-based Aabar Investments PJSC.

Arabtec retreated the most in a month. Emaar Properties PJSC, the United Arab Emirates’ biggest developer, declined to the lowest this year. The DFM General Index lost 1.2 percent, the biggest fluctuation among the seven Gulf markets, to 1,814.33. Most other Gulf benchmarks advanced.

“The Arabtec news is negative in the short-term because of shareholder dilution,” said Yazan Abdeen, a fund manager at ING Investment Management (Dubai) Ltd. In the longer-term, Arabtec will benefit on two levels, “first, cash, which will make the working capital of the company more efficient, and second, the amount of backlog that Aabar will bring to the table.”

Alaqaria agrees to Barwa takeover terms

Qatar Real Estate Investments QREC.QA (Alaqaria) agreed to a takeover by Barwa Real Estate BRES.QA, the companies said on Sunday, in a deal creating Qatar's ninth-largest company with a market value of $3 billion.

Each Alaqaria share will be exchanged for 1.1 shares in Barwa, it said, adding that the deal values Alaqaria shares at 36.30 riyals per share and implies a 30.6 percent premium, a statement on the Qatari bourse website said.

Alaqaria shares were up 9.7 percent at 30.50 riyals in the wake of the deal, which was announced in early 2009.

Kuwait's Global to sell China asset for debt

Kuwait's Global Investment House said on Sunday it will use the proceeds from selling its stake in a Chinese firm as part of its debt settlement plan.

Global, one of the country's biggest investment firms, reached a deal with creditors in December to reschedule $1.7 billion in debt, and entered into new three-year facilities with each of its 53 lending banks. [ID:nGEE5B90V7]

"Global owns a stake in a Chinese firm that was recently listed on the Hong Kong stock exchange... the proceeds of the sale will be used to repay part of the company's debt," Global said in a statement on Bahrain's bourse website.

Kuwait's Burgan ups stake in Baghdad bank to 50.6 pct

Kuwait's Burgan Bank (BURG.KW) said on Sunday it became a majority shareholder in an Iraqi lender after it raised its stake to 50.6 percent.

Burgan, the commercial banking arm of investment firm Kuwait Project Co (KIPCO) (KPRO.KW), bought an additional 5.3 percent stake in the Bank of Baghdad for $10.7 million, it said in a statement on the Kuwaiti bourse website.

In 2008, Burgan agreed to purchase the foreign assets of Bahrain's United Gulf Bank UGBB.BH, another unit of KIPCO, for 194 million dinars ($675.5 million).

This gave Burgan stakes in the Bank of Baghdad, Algeria Gulf Bank, Jordan Kuwait Bank JOBK.AM and Tunis International Bank.

The acquisition was part of a push by Burgan to move outside of its home market for the first time.END

Private equity firms set to see upside trend in 2011 (Interview)

The worst in the private equity (PE) industry is still to come. A number of analysts expect more than 50 per cent of the firms in the sector to be wiped out over the next two to four years.

A couple of companies, in fact, were already being disbanded, Karim El Solh, Founder and Chief Executive of Gulf Capital told Emirates Business.

"A lot of firms were launched in 2006 and 2007 because there were a lot of money. It would be hard to build a track record, have an exit and be able to build your second or third fund. Most of these firms will be one-time funds, he said, and disappear by slow death," he said.

Mashreq certain Ahab, Saad case should be in US

Even as a New York State judge has voiced his concern that the lawsuits involving Ahmad Hamad Algosaibi & Bros (Ahab) and Saad Group chairman Maan Al Sanea may not belong in the US courts, Mashreq, which is involved in related litigation in the US with the Saudi parties, has reiterated that the bank is certain of its case as the transactions were undertaken in New York.

"Mashreq's original claims were filed in New York because in performing its obligations in two foreign exchange transactions, Mashreq paid $225 million to Ahab and TIBC's bank accounts in New York. Mashreq is certain of its case," Mashreq said in a statement to Emirates Business.

The motions to be heard on January 5 were Mash-req's motion to dismiss Ahab's counterclaim, Ahab partners' to dismiss Mashreq's claim against the partners, and Maan Al Sanea's that New York is not the appropriate jurisdiction for Ahab's claim against him.

"It is important to note the judge made no rulings. The issue in court centred on whether the Ahab 'third party claim' against Al Sanea should be heard in New York. The judge asked Ahab to respond to Al Sanea's motion objecting to New York's jurisdiction and the claims against Al Sanea. Further the judge requested Mashreq to comment on these issues following Ahab's submission," said Mashreq.END

Authority will fine-tune UAE stock market regulation

The Emirates Securities and Commodities Authority (SCA) said Saturday that it will fine-tune the stock market regulation to bring it in line with the latest practices of international financial markets.

"The SCA continues to develop a number of rules and regulations to boost the legislative infrastructure of the UAE's financial market sector, while on the other hand, it continues to organise awareness and counselling campaigns to serve the interest of all stakeholders and concerned parties in that sector," the SCA said in a statement yesterday.

Abdullah Al Turifi, SCA Chief Executive Officer, said the SCA was striving to develop further the legislative system of the UAE's financial market and had input some necessary amendments into the rules and regulations to strengthen the legislation further to raise them to the level of those of the international markets.

Moody’s studies support for Abu Dhabi firms

In the latest fallout from Dubai’s debt troubles, Moody’s Investors Service is warning that it may cut credit ratings on several companies controlled by the Abu Dhabi Government if officials fail to convince the agency that they would never be allowed to go the way of Dubai World.

The credit ratings agency issued a report last week outlining the criteria it is using to determine whether to continue giving such UAE companies as Mubadala Development and the International Petroleum Investment Company (IPIC) higher ratings on the strength of their government ties.

Saying they were in discussions with government officials, Moody’s analysts warned that if they came away with even slightly less confidence in the likelihood of a potential government bailout, “some ratings could drop by several notches”.

Arabtec to use Aabar cash for future buys

Arabtec Holding will use some of the cash from Aabar Investments’s stake in the firm to fund its own future acquisition spree, its chief executive said yesterday.

Aabar, the Abu Dhabi firm that last year took a major stake in the championship winning Brawn GP Formula One team, said on Friday it would acquire 70 per cent of Arabtec, the largest construction company in the UAE, in a deal worth Dh6.4 billion (US$1.74bn).

The acquisition would come through a bond issued by Arabtec to Aabar that will convert to new Arabtec shares at maturity.

Saudi Shares Rise, Led By Samba, Arab National, as Oil Gains

Saudi Arabian stocks rose for a sixth day, led by Samba Financial Group and Arab National Bank, amid gains in oil prices.

Samba, the kingdom’s second-largest bank, gained 3.3 percent to 54.5 riyals, the biggest increase since Dec. 14. Arab National rose 3.3 percent to 44.5 riyals.

West Texas Intermediate crude has risen 13 percent in the past month, reaching $83.52 a barrel at the New York Mercantile Exchange on Jan. 6, its highest since October 2008. Oil settled at $82.75 yesterday. Petroleum accounts for 45 percent of Saudi Arabia’s gross domestic product, according to the U.S. Central Intelligence Agency’s World Factbook.

Aluminum Output ‘Withering’ in Europe on Power Costs

Rising aluminum prices in 2010 may not be enough to halt the decline in European output of the metal as producers quit the region for cheaper electricity in the Middle East.

Half of Europe’s remaining capacity may shut by the end of this year and two-thirds could be cut through 2013, according to the European Aluminium Association. Relying on imported metal would raise costs for fabricators of aluminum products such as foil and window frames, who employ more than 200,000 people in Europe, the EAA said. End-users such as Volkswagen AG and Bayerische Motoren Werke AG would also end up paying more.

“Western European smelters are gradually withering on the vine,” said Julian Kettle, a London-based analyst at metals research company Brook Hunt who has tracked the aluminum market for more than two decades.

Aggressive Dubai public sector in full retreat for 2010

The six per cent fall in the annual budget published by the Government of Dubai at the end of last week confirms the retreat of the once aggressive Dubai public sector as the motor of economic growth.

And as if to underline that the baton is being passed over to the private sector it was announced that the next Dubai Electricity and Water Authority plant will be the emirate’s first ever privately managed power and desalination project, with consultants invited to bid by February 22nd to advise on ‘an independent power and water (IWPP) model’.

The fate of the publicly financed $2.7 billion Hassyan ‘P’ station for which five bids were tendered last November is not known.