Dubai World
Encyclopedia
Dubai World is an investment company
that manages and supervises a portfolio of businesses and projects for the Dubai
government across a wide range of industry segments and projects that promote Dubai as a hub for commerce and trading. It is the emirate's flag bearer in global investments and has a central role in the direction of Dubai's economy. Assets include DP World, which caused considerable controversy when trying to take over six US ports, and Nakheel, its property arm, which built The Palm Islands and The World
developments, and Istithmar World, its investment company. It is chaired by Ahmed bin Saeed Al Maktoum
.
Mohammed bin Rashid Al Maktoum
, Vice President and Prime Minister of the United Arab Emirates
and Ruler of Dubai
. He also holds the majority stake in Dubai World.
On 2 July 2006, it was launched as a holding company
with more than 50,000 employees in over 100 cities around the globe. The group now has extensive real estate investments in the United States
, the United Kingdom
and South Africa
.
Dubai World made headlines in March 2008 after its chairman, Sultan Ahmed bin Sulayem, threatened to take the fund's money out of Europe
. Dubai World's threats came shortly after the European Union
attempted to lay out "a set of principles for transparency, predictability and accountability" for sovereign wealth fund
s.
On November 26, 2009, Dubai World proposed to delay repayment of its debt, which raised the risk of the largest government default since the Argentine debt restructuring
in 2001. Dubai World, the investment vehicle for the emirate, asked to delay for six months payment on $26 billion of debt. The extent of the debt rattled many markets causing many indices to drop; including oil prices. U.S. stocks fell sharply but rebounded from their lows as investors concluded that the damage might be contained. The Dow Jones industrial average lost about 155 points, or roughly 1.5 percent, in a shortened trading day, and other stock averages also sank. Oil prices plunged as much as 7 percent before recovering some ground later in the day.
On December 12, 2010, Dubai named Sheikh
Ahmed bin Saeed Al Maktoum
, head of Emirates airline and uncle of the state’s ruler, as chairman of Dubai World in a board revamp a year after the company said it would halt loan repayments, roiling markets. The 51-year-old replaced Sultan Ahmed bin Sulayem
.
to 'standstill' and extend maturities
until at least 30 May 2010". The company has laid off 10,500 employees worldwide. At that time, Dubai World had debts of $59-billion, accounting for nearly three-quarters of the emirate's US$80-billion debt. This includes a US$3.5-billion loan which the company was unable to repay by its December deadline.
In response to the government announced moratorium of Dubai World's debts, both Moody's
and Standard & Poor's Investors Services heavily downgraded the debt of various Dubai government-related entities with interests in property, utilities, commercial operations and commodities trading. In Moody's case, the downgrade meant that the affected agencies lost their investment grade status.
Concerns over the fallout from Dubai's debt problems contributed to the main European stock indexes falling over 3% on 26 November. This was followed by drops in Asian stocks on 27 November. However the European stock markets rebounded as investors' fears subsequently subsided as they decided the estimated debt wasn't big enough to trigger a systemic failure in global financial markets. "For now, the market is taking the view that the Dubai debt issue may be a storm rather than a hurricane," said Jane Foley, a research director at Forex.com in London
. The American markets were closed on 26 November but American stocks fell on the afternoon of 27 November as similar fears rattled Wall Street
in a thinly-traded half-day session. The Dow Jones industrial average
(INDU) fell 155 points, or 1.5%, after closing 25 November at a 13-month high. The Dow had lost 233 points in the morning. Also, concerns of the crisis led to a sharp rally in the U.S. dollar and Japanese Yen
against most other world currencies as these currencies had been perceived as "safe haven" currencies during times of uncertainty.
An unnamed senior official told news agencies on November 28 that Abu Dhabi
, the wealthy capital of the United Arab Emirates
, would "pick and choose" how to assist Dubai World. "We will look at Dubai's commitments and approach them on a case-by-case basis," the official told the Reuters
news agency by telephone, adding: "It does not mean that Abu Dhabi will underwrite all of their debts." Meanwhile India
's central bank
governor said an assessment of the impact of Dubai's debt problems was needed before deciding on a response. "We should not react to instant news like this. One lesson of the crisis is that we must study the developments, and I think we must measure the extent of the problem there and how it impacts India," Duvvuri Subbarao
said in Hyderabad, India.
A public statement on 30 November 2009, of the Dubai Finance Department Director-General, that the Dubai World debts are "not guaranteed by the government" appears to correctly reflect the legal position, as the Dubai Government were not required by the lenders, and nor did they provide, any contractual guarantees in respect of the Dubai World debt:
Officials in the United Arab Emirates tried on December 1 to calm investors and the public over the Dubai World debt crisis, and the company itself said it was seeking to renegotiate only the $26 billion in obligations held by its troubled real estate developer, Nakheel. It also said that it had hired Moelis & Company
, the investment boutique headed by Ken Moelis
, a former UBS banker, to be its adviser. Rothschild
is also advising Dubai World. Shares in Dubai and Abu Dhabi were down for a second day, with both key indexes declining about 6%. On November 30, shares dropped in Dubai and Abu Dhabi by 7.3% and 8.3%, respectively.
On December 14, 2009 the Dubai government received $10 billion in surprise aid from Abu Dhabi for debt-laden Dubai World, which said it would use $4.1 billion of it to repay its Nakheel unit's Islamic bond maturing on the same day.
As of 24 January Dubai World's property assets have exceeded USD 120 billion, so that it could cover its debt of USD 57 billion.
and Dubai World had tabled this offer to bank lenders in March 2010 after three months of negotiations.
Investment company
An investment company is a company whose main business is holding securities of other companies purely for investment purposes. The investment company invests money on behalf of its shareholders who in turn share in the profits and losses....
that manages and supervises a portfolio of businesses and projects for the Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
government across a wide range of industry segments and projects that promote Dubai as a hub for commerce and trading. It is the emirate's flag bearer in global investments and has a central role in the direction of Dubai's economy. Assets include DP World, which caused considerable controversy when trying to take over six US ports, and Nakheel, its property arm, which built The Palm Islands and The World
The World (archipelago)
The World or World Islands is an artificial archipelago of various small islands constructed in the rough shape of a world map, located off the coast of Dubai, United Arab Emirates. The World islands are composed mainly of sand dredged from Dubai's shallow coastal waters, and are one of several...
developments, and Istithmar World, its investment company. It is chaired by Ahmed bin Saeed Al Maktoum
Ahmed bin Saeed Al Maktoum
Sheikh Ahmed bin Saeed Al Maktoum is the President of the Department of Civil Aviation, CEO and Chairman of The Emirates Group and Chairman of Dubai World.- Background:...
.
History
Dubai World was established under a decree ratified on 2 March 2006 by SheikhSheikh
Not to be confused with sikhSheikh — also spelled Sheik or Shaikh, or transliterated as Shaykh — is an honorific in the Arabic language that literally means "elder" and carries the meaning "leader and/or governor"...
Mohammed bin Rashid Al Maktoum
Mohammed bin Rashid Al Maktoum
Mohammed bin Rashid Al Maktoum , also Sheikh Mohammed, , is the Prime Minister and Vice President of the United Arab Emirates , and absolute monarch of Dubai.-Personal life and education:...
, Vice President and Prime Minister of the United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
and Ruler of Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
. He also holds the majority stake in Dubai World.
On 2 July 2006, it was launched as a holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
with more than 50,000 employees in over 100 cities around the globe. The group now has extensive real estate investments in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
and South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
.
Dubai World made headlines in March 2008 after its chairman, Sultan Ahmed bin Sulayem, threatened to take the fund's money out of Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
. Dubai World's threats came shortly after the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
attempted to lay out "a set of principles for transparency, predictability and accountability" for sovereign wealth fund
Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
s.
On November 26, 2009, Dubai World proposed to delay repayment of its debt, which raised the risk of the largest government default since the Argentine debt restructuring
Argentine debt restructuring
Argentina went through an economic crisis beginning in the mid-1990s, with full recession between 1999 and 2002; though it is debatable whether this crisis has ended, the situation has been more stable, and improving, since 2003....
in 2001. Dubai World, the investment vehicle for the emirate, asked to delay for six months payment on $26 billion of debt. The extent of the debt rattled many markets causing many indices to drop; including oil prices. U.S. stocks fell sharply but rebounded from their lows as investors concluded that the damage might be contained. The Dow Jones industrial average lost about 155 points, or roughly 1.5 percent, in a shortened trading day, and other stock averages also sank. Oil prices plunged as much as 7 percent before recovering some ground later in the day.
On December 12, 2010, Dubai named Sheikh
Sheikh
Not to be confused with sikhSheikh — also spelled Sheik or Shaikh, or transliterated as Shaykh — is an honorific in the Arabic language that literally means "elder" and carries the meaning "leader and/or governor"...
Ahmed bin Saeed Al Maktoum
Ahmed bin Saeed Al Maktoum
Sheikh Ahmed bin Saeed Al Maktoum is the President of the Department of Civil Aviation, CEO and Chairman of The Emirates Group and Chairman of Dubai World.- Background:...
, head of Emirates airline and uncle of the state’s ruler, as chairman of Dubai World in a board revamp a year after the company said it would halt loan repayments, roiling markets. The 51-year-old replaced Sultan Ahmed bin Sulayem
Sultan Ahmed bin Sulayem
Sultan Ahmed bin Sulayem is the chairman of Dubai World, a diversified holding company based in the United Arab Emirates and owned by the government of Dubai.-Family background:...
.
2009 debt standstill
With the onset of the financial crisis of 2007–2010, Dubai's real estate market declined after a six-year boom. On November 25, 2009, the Dubai government announced that the company "intends to ask all providers of financing to Dubai World and [its subsidiary] NakheelNakheel Properties
Nakheel is a real estate developer in Dubai and creator of several land reclamation projects, including the Palm Islands, the Dubai Waterfront, The World and The Universe Islands. Its residential projects include The Gardens, International City, Jumeirah Islands and Jumeirah Lake Towers. Its...
to 'standstill' and extend maturities
Maturity (finance)
In finance, maturity or maturity date refers to the final payment date of a loan or other financial instrument, at which point the principal is due to be paid....
until at least 30 May 2010". The company has laid off 10,500 employees worldwide. At that time, Dubai World had debts of $59-billion, accounting for nearly three-quarters of the emirate's US$80-billion debt. This includes a US$3.5-billion loan which the company was unable to repay by its December deadline.
In response to the government announced moratorium of Dubai World's debts, both Moody's
Moody's
Moody's Corporation is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized...
and Standard & Poor's Investors Services heavily downgraded the debt of various Dubai government-related entities with interests in property, utilities, commercial operations and commodities trading. In Moody's case, the downgrade meant that the affected agencies lost their investment grade status.
Concerns over the fallout from Dubai's debt problems contributed to the main European stock indexes falling over 3% on 26 November. This was followed by drops in Asian stocks on 27 November. However the European stock markets rebounded as investors' fears subsequently subsided as they decided the estimated debt wasn't big enough to trigger a systemic failure in global financial markets. "For now, the market is taking the view that the Dubai debt issue may be a storm rather than a hurricane," said Jane Foley, a research director at Forex.com in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
. The American markets were closed on 26 November but American stocks fell on the afternoon of 27 November as similar fears rattled Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
in a thinly-traded half-day session. The Dow Jones industrial average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
(INDU) fell 155 points, or 1.5%, after closing 25 November at a 13-month high. The Dow had lost 233 points in the morning. Also, concerns of the crisis led to a sharp rally in the U.S. dollar and Japanese Yen
Japanese yen
The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...
against most other world currencies as these currencies had been perceived as "safe haven" currencies during times of uncertainty.
An unnamed senior official told news agencies on November 28 that Abu Dhabi
Abu Dhabi
Abu Dhabi , literally Father of Gazelle, is the capital and the second largest city of the United Arab Emirates in terms of population and the largest of the seven member emirates of the United Arab Emirates. Abu Dhabi lies on a T-shaped island jutting into the Persian Gulf from the central western...
, the wealthy capital of the United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
, would "pick and choose" how to assist Dubai World. "We will look at Dubai's commitments and approach them on a case-by-case basis," the official told the Reuters
Reuters
Reuters is a news agency headquartered in New York City. Until 2008 the Reuters news agency formed part of a British independent company, Reuters Group plc, which was also a provider of financial market data...
news agency by telephone, adding: "It does not mean that Abu Dhabi will underwrite all of their debts." Meanwhile India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
's central bank
Reserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
governor said an assessment of the impact of Dubai's debt problems was needed before deciding on a response. "We should not react to instant news like this. One lesson of the crisis is that we must study the developments, and I think we must measure the extent of the problem there and how it impacts India," Duvvuri Subbarao
Duvvuri Subbarao
Duvvuri Subbarao is an Indian economist, central banker, and civil servant. He is the 22nd and current Governor of Reserve Bank of India, serving under Prime Minister Manmohan Singh....
said in Hyderabad, India.
A public statement on 30 November 2009, of the Dubai Finance Department Director-General, that the Dubai World debts are "not guaranteed by the government" appears to correctly reflect the legal position, as the Dubai Government were not required by the lenders, and nor did they provide, any contractual guarantees in respect of the Dubai World debt:
Officials in the United Arab Emirates tried on December 1 to calm investors and the public over the Dubai World debt crisis, and the company itself said it was seeking to renegotiate only the $26 billion in obligations held by its troubled real estate developer, Nakheel. It also said that it had hired Moelis & Company
Moelis & Company
Moelis & Company is a global investment banking and merchant banking firm. The firm provides advisory services related to mergers & acquisitions, recapitalization & restructuring, capital markets advisory and risk advisory...
, the investment boutique headed by Ken Moelis
Ken Moelis
Ken Moelis is an investment banker and founder of Moelis & Company, an independent investment banking firm.-Education:Ken Moelis holds a Bachelor in Business Administration and a Masters of Business Administration from the Wharton School of the University of Pennsylvania.-Career:Moelis began his...
, a former UBS banker, to be its adviser. Rothschild
N M Rothschild & Sons
N M Rothschild & Sons is a private investment banking company, belonging to the Rothschild family...
is also advising Dubai World. Shares in Dubai and Abu Dhabi were down for a second day, with both key indexes declining about 6%. On November 30, shares dropped in Dubai and Abu Dhabi by 7.3% and 8.3%, respectively.
On December 14, 2009 the Dubai government received $10 billion in surprise aid from Abu Dhabi for debt-laden Dubai World, which said it would use $4.1 billion of it to repay its Nakheel unit's Islamic bond maturing on the same day.
As of 24 January Dubai World's property assets have exceeded USD 120 billion, so that it could cover its debt of USD 57 billion.
Debt Deal
On May 20, 2010 Dubai World said that it had reached an agreement "in principle" with most of its bank lenders to restructure debt worth $23.5bn (£16.4bn). It would be left with debts of $14.4bn after the restructuring. But the deal must still be approved by other banks that were not involved in the negotiations. The terms of the restructuring, include converting $8.9bn of government debt into equity. The government of DubaiDubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
and Dubai World had tabled this offer to bank lenders in March 2010 after three months of negotiations.
Managed companies
- DP World, the third largest port operator in the world
- Economic Zones World
- Nakheel, known for residential estate development projects such as the Palm IslandsPalm IslandsThe Palm Islands are an artificial archipelago in Dubai, United Arab Emirates on which major commercial and residential infrastructures will be constructed...
, the Dubai WaterfrontDubai WaterfrontThe Dubai Waterfront was expected to become the largest waterfront and largest man-made development in the world. The project is a conglomeration of canals and artificial archipelago; it will occupy the last remaining Persian Gulf coastline of Dubai, the most populous emirate of the United Arab...
, The WorldThe World (archipelago)The World or World Islands is an artificial archipelago of various small islands constructed in the rough shape of a world map, located off the coast of Dubai, United Arab Emirates. The World islands are composed mainly of sand dredged from Dubai's shallow coastal waters, and are one of several...
and The Universe IslandsThe Universe (Dubai)The Universe is a planned artificial archipelago in the shape of the Milky Way and Solar System, that would be built off the coast of Dubai, United Arab Emirates. The project was announced in January 2008 by the developer Nakheel, which also built the Palm Islands and The World archipelago... - Dubai DrydocksDubai DrydocksDubai Drydocks is a drydocks facility located adjacent to Port Rashid in Dubai, United Arab Emirates. The idea for Dubai Drydocks began in 1971. After feasibility studies and construction, the facility opened in 1983. It is the only large drydocks facility in the Persian Gulf.-External links:*...
- Dubai Maritime CityDubai Maritime CityDubai Maritime City is a multipurpose maritime zone. It is a member of the Dubai World group of companies. Maritime city is expected to be fully operational by 2012...
- Dubai Multi Commodities CentreDubai Multi Commodities CentreThe Dubai Multi Commodities Centre is the free zone authority for the Jumeirah Lake Towers free zone. It was established in 2002 as a strategic initiative of the Government of Dubai with a mandate to provide the physical, market and financial infrastructure required to set up a commodities market...
- Istithmar WorldIstithmar WorldIstithmar World is an investment firm based in Dubai, United Arab Emirates . This company is a state-run business owned by Dubai World, a Dubai government-owned company, and was established in 2003...
- Infinity World Development part owner of CityCenter
- Ikkibaa World
- Island Global Yachting
- Limitless
- LeisurecorpLeisurecorpLeisurecorp, formerly Istithmar Leisure, is a subsidiary of Dubai World, established in 2006, that invests in sports and leisure facilities, with golf being a particular focus....
- Inchcape Shipping ServicesInchcape Shipping ServicesInchcape Shipping Services is the world's largest independent marine services provider managing over 60,000 port calls each year through a network of over 260 offices in 65 countries...
- Tejari
- TechnoPark
- P&O Maritime
- Discovery GardensDiscovery GardensDiscovery Gardens is a residential community located in Jebel Ali, Dubai, United Arab Emirates. The community is composed of residential apartment units of different styles such as Contemporary, Zen, Moghul etc..-Recreation:...
- TamweelTamweelTamweel is one of the largest real estate developers in the Middle East, based in Abu Dhabi, that was established in March 2004....