Tuesday, 20 July 2010
Not long ago, western energy majors such as Royal Dutch Shell and France’s Total were eager to develop South Pars, the world’s biggest natural gas field in southern Iran.
Today, only one foreign company – the China National Petroleum Corporation – is present in one phase of the field, which lies beneath the waters of the Gulf. Iran’s state-owned and quasi-private companies have taken over all other projects and they struggle with a shortage of investment and equipment.
Under scorching sun and in high humidity near the town of Assaluyeh, Iranian workers are busy building pipe racks and doing electrical and mechanical tasks on onshore facilities.
Abu Dhabi, the oil-rich emirate, forecast a second consecutive budget deficit this year, the shortfall to be covered by transfers from state-run investment bodies, according to a government-guaranteed bond prospectus.
Government spending will exceed revenue by 84.9 billion dirhams ($23.1 billion) this year, compared with 126.5 billion dirhams in 2009, according to statistics in the Waha Aerospace BV prospectus obtained today by Bloomberg News. The budget was based on an assumed average oil price of $60 a barrel, compared with $40 last year.
The deficits from 2009 and 2010 will be funded by transfers from Abu Dhabi Investment Authority and Abu Dhabi Investment Council, the prospectus said.
Dubai’s financial centre is working on a plan to launch a second-tier market to offer smaller companies the opportunity to tap growth capital.
The idea, akin to London Stock Exchange’s Alternative Investment Market, would ease the bar of entry for the region’s small- and medium-sized companies, said Nasser Saidi, head of external affairs at the Dubai International Financial Centre Authority.
Mr Saidi, who is also DIFC’s chief economist, said the plan was in early stages of development with the DIFC now contacting relevant regulators and market practitioners about ideas for the exchange.
Until the financial crisis, private equity was one of the Gulf’s trendiest industries. Is it back in fashion yet?
A report published today by the Gulf Venture Capital Association (GVCA) hints so:
Total value of funds raised decreased from $5.4 billion in 2008 to $1.1 billion in 2009 and the number of annual fund closings also decreased from seventeen to only six in each year, respectively. However, a glimmer of a rebound appeared in the first quarter of 2010, as $1 billion was raised from only six funds, suggesting investors’ appetite may be returning to the market.
Dubai International Financial Center, a tax-free business park, is exploring the possibility of setting up a “second-tier” stock exchange for small and medium-sized companies in the Middle East.
The existing equity markets in the Middle East are geared for bigger companies, although about 95 percent of the firms operating in the region are small and medium-sized, the center’s chief economist Nasser Saidi told reporters at the Gulf Venture Capital Association conference in Dubai today. The private equity industry needs a second-tier market where they can list smaller companies with revenue of $20 million to $80 million and which has less stringent listing rules, he said.
“We view this as an initiative for the region,” Saidi said. Discussions have been held with a number of private equity firms that may use the market although there is no timeframe yet to set it up, he said.
Vodafone Qatar VFQS.QA said its quarterly net loss narrowed 5 percent from the previous quarter as it grew its customer base by 15 percent.
The Qatari affiliate of British mobile operator Vodafone (VOD.L), which is fighting a regulatory decision to allow new competitor Virgin Mobile into the Qatari market, said its net loss for the first quarter narrowed to 148.7 million Qatari riyals ($40.87 million) from 155.7 million in the previous quarter.
The company posted first quarter revenue of 175.8 million riyals, up 22 percent from the previous quarter. It had 534,000 customers by the end of June, representing 32 percent of the population of Qatar and a 19 percent market share.
Abu Dhabi Commercial Bank (ADCB) claimed in a UK court yesterday that it was owed about US$32 million (Dh117.5m) by the Saad Group, a troubled Saudi conglomerate.
ADCB told a judge in London that Saad Trading, Contracting and Financial Services, a division of the Saad Group, defaulted on a currency swap worth $32m last summer, according to a Bloomberg report.
The bank’s lawyer said Saad’s defence – that the bank did not alert it on time about the termination of the agreement – was a tactic “designed only to delay judgment day against it”, Bloomberg reported.
Airbus SAS and Boeing Co. announced 189 orders on the first day of the Farnborough Air Show, more than double the total from last year’s event, as leasing companies returned to the market after the recession.
Airbus won contracts yesterday for 122 planes worth $11.6 billion at list prices, while Boeing logged 67 orders valued at $7.5 billion. They had 69 and 9 respectively at the 2009 Paris Air Show, which alternates annually with Farnborough, England.
Leasing companies led by General Electric Co.’s GECAS unit accounted for 151 of the contracts, eclipsing the business done by airlines. The biggest airline order was from Emirates, which agreed to buy 12 Boeing 777-300ERs with a list price of $3.3 billion.
Dubai World-owned Nakheel PJSC’s Islamic bonds are trading at yields twice as high as in 2007 even after a four-month rally, underscoring the difficulty for Persian Gulf real-estate companies to borrow through debt sales.
“Access to the market is still difficult for companies operating in the real-estate sector,” Mohamed Damak, Paris- based credit analyst and co-chair of the Islamic finance working group at Standard & Poor’s, said in an interview yesterday. “The market is somewhat closed for these entities.”
The yield on Nakheel’s 2.75 percent sukuk fell to 15.4 percent yesterday from 86 percent on March 25, when Dubai’s government said it would support the company with $9.5 billion, according to prices compiled by Bloomberg. Nakheel, a builder of palm-shaped islands off Dubai’s coast, is a unit of Dubai World, the world’s third-largest port operator.
The UAE's first IPO of 2010, scheduled for June by lead manager Shuaa Capital, will not take place before the fourth quarter due to the weak market, a banking executive familiar with the matter said.
Shuaa said in May it was lead manager for a 1 billion UAE dirhams ($272 million) IPO for an unnamed Abu Dhabi company.
A Shuaa spokeswoman declined to comment.