Bloomberg rocks table at Istithmar’s delicate game

Dubai World (DW) has become the litmus test for the future of Dubai Inc. The state-owned conglomerate, with interests ranging from ports to property and investment, certainly symbolises the past business achievements of the emirate, but increasingly has come to encapsulate the acute problems facing Dubai in the wake of the financial crisis.

With its US$60 billion (Dh220.38bn) of debts and liabilities, DW accounts for the bulk of Dubai’s admitted $80bn debts (though many analysts believe the total is higher); the $3.5bn sukuk held by DW’s subsidiary Nakheel, due for repayment in December, is regarded in international financial circles as the single most urgent issue Dubai has to resolve.

Now further questions have been cast over the conglomerate. A report by Bloomberg this week on Istithmar World, DW’s international private equity arm, alleged that the fund is under severe financial pressure, going further than any previous assessment of DW’s problems. It says Istithmar may become the first sovereign wealth fund to liquidate in the face of falling asset values, and that it, or its assets, will “probably” be sold in order to help DW repay its debts, estimated at $12bn or more.

List of Dubai debts.