Dubai Investments: all set for a makeover
Dubai Investments is among a few contenders gearing up to join the Emerging Market Index in May as its stocks have jumped over 329% since January 2013 amid surging business and real estate trends.
With the countdown having commenced for inclusion in emerging market index next month, the leading listed firms on the UAE and Qatar bourses are exploring possibilities to join the prestigious index to attract foreign investment in the country. Consistent performers in the two Gulf states are reviewing their foreign ownership caps before index compiler Morgan Stanley Capital International (MSCI) raises the UAE and Qatar equities to emerging market status in May, which is expected to attract fresh foreign money in the region.
Leading players in the UAE’s shipping, real estate, banking, finance and investment sectors, which have been performing consistently and more open in foreign ownership rules, are likely to be part of global emerging markets next month. Dubai Investments, a leading investment company listed on the Dubai Financial Market (DFM), is among few possible shortlisted names which are strong contenders to join the emerging market index due to its extraordinary consistent performance, and moves to increase foreign ownership caps by 15 per cent and offering increasing investment opportunities in the wake of Dubai’s successful bid to host the World Expo 2020.
Buoyed by positive business confidence across sectors and a resurgent real estate industry in the UAE, Dubai Investments (DI) has posted one of the biggest gains on the stock market with its shares rallying over 329.54 per cent in past 15 months. The company stocks, which closed first quarter at Dh3.78 on March 31, 2014 compared to Dh0.88 as on January 2, 2013, have led the winning streak as one of the best performing scrips on DFM over the last 15 months. The impressive rally mirrored the overall bullish trends on DFM, which saw real estate and financial institutions’ stocks on a sustained bull run through the year.
In fact, the DI stock rally has been consistent, with the share price registering a 53 per cent growth in the first quarter of 2014. The rally coincides with an impressive financial year for DI, which saw profits surging to Dh822.02 million, an increase of approximately 156 per cent over Dh321.37 million reported in 2012. All sectors of DI’s diversified business base have reported growth, with real estate portfolio performing exceptionally well.
Some of the DI subsidiaries have already seen an upturn in sales as a result of construction-related demand for products such as glass, aluminium extrusion and steel fabrication, among others. With the company’s investments in nearly 40 companies and joint ventures across high-yielding industries, the ground has been firmly laid at DI for robust returns through the year – both on the bourses and beyond.
“The overall economic indicators in the UAE are very positive, and Dubai Investments’ strong growth, backed by its sound fundamentals, is reflected in the surge in our stock price on the Dubai Financial Market in the last year. To achieve over 329 per cent growth in our stock price since January 2013 is amazing,” Khalid bin Kalban, Managing Director and Chief Executive Officer of Dubai Investments, told Khaleej Times.
Dubai Investments shares, which started 2014 at Dh2.47 on January 2, are likely to replicate its success this year due to positive developments on economic front. It crossed Dh3 level on February 10 and ended the month at Dh3.58. The scrip, which listed on DFM on March 26, 2000, so far outperformed the benchmark index, which advanced more than 32 per cent this year. Stock analysts are of the view that it will continue to break key barriers in successive intervals and may double its value in first half.
Kalban, who is upbeat about the outlook, is confident of consistent performance of the company due to concrete growth plans to ensure sustainability in years ahead.
“We are excited about the outlook of our stock price for 2014. At DI, our strong focus this year is on the real estate sector, backed by our impressive land banks across the UAE and our portfolio of over 18 manufacturing units specialised in building materials and related sector, which is set to capitalise on the resurgent real estate sector.
“Moreover, we have concrete plans to enter into strategic financial acquisitions as well as exits during 2014. This, along with our diversified business base, will augur well for DI’s growth amidst the upbeat market sentiment. We hope to see continued growth and upward trend on our stock price during 2014,” Kalban said.
Raising foreign ownership limits
The diversified manufacturer and a leading investor in property sector is also planning to raise foreign ownership limit of its shares to 35 per cent of its total paid-up capital. At present foreign investors hold 14.25 per cent of Dubai Investment’s shares out of the total 20 per cent allowed, bourse data shows.
The UAE nationals remained the leading shareholders with 85.80 per cent stake while GCC and Arab investors hold 5.85 per cent and 3.82 per cent, respectively. Foreigners owned remaining 4.53 per cent, according to the bourse data as of March 31.
“The firm’s shareholders, including sovereign fund Investment Corp of Dubai which has an 11.54 per cent stake, will vote on the proposal at a meeting on April 15,” the company said in a recent statement.
The proposal follows similar moves by other Dubai-listed companies such as property developers Deyaar and Union Properties, Dubai Islamic Bank and Mashreq bank.
“Raising the foreign ownership cap in Dubai Investments to 35 per cent will be a positive step forward for us. This will strengthen our reputation as a global conglomerate and complement our diversified presence in the international markets through our subsidiaries and investments,” Kalban said.
“We saw an increasing appetite among foreign investors in our businesses during the recent roadshows across leading international markets for the $300 million sukuk by Dubai Investments Park. In view of this, we feel that increasing the foreign ownership cap is a step in the right direction, which helps broaden our abilities to raise capital in line with our future expansion plans,” he added.
About the outlook for DI scrip if it is listed on the Emerging Market Index, Kalban said this move would bolster the company’s reputation in international market and add more liquidity in the market.
“We see a huge opportunity for Dubai Investments scrip if it is listed on the Emerging Markets Index. This would offer us enhanced exposure and international recognition among top investments portfolios and corporate investments funds from across the globe. In other words, the move will boost our international reputation, which will augur well for us in the long run.
Overall, from a market standpoint, this move will add more liquidity besides bringing in new foreign investment institutions who adopt long-term investment policies, thus contributing to achieving the desired balance in the market between corporate investors and individual investors, thus improving the overall quality of investments.
“We are confident that the upward trend will continue once the scrip is listed on Emerging Market Index,” Kalban said.
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