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Thursday, December 20, 2007

Middle East Power - Abu Dhabi


This is great if Malaysian have good mindset and able to think for long-term. Good opportunity, not only for IDR Development in Johor but worldwide exposure.


Malaysia is fast becoming the investment destination for those from the Middle East.

EXCEPT for those who read the business section of the newspapers, a major corporate deal that is underway is likely to be missed by most ordinary Malaysians. Yet, it would have tremendous impact on the country’s investment standing.

The Abu Dhabi Commercial Bank is said to be planning to take up a 25% stake in RHB Capital Bhd, amounting to at least RM4bil, from the Employees Provident Fund.

The move, if successful, will help RHB Cap become a strong regional financial services group, especially in the area of Islamic banking, and help to push the RHB Banking Group into one of three financial services providers in Asean in the years ahead.

But more importantly, Malaysia is slowly but surely becoming a major destination for investments from the Middle East. Consider these facts: In the past six months, several billions of ringgit of investments have flowed from Abu Dhabi, Dubai, Kuwait and Saudi Arabia.

This amount will easily breach more than RM12bil if the ADCB goes ahead as expected and buys the stake in RHB Cap from the EPF. The market suggests that the purchase price will close to RM4bil (based on between RM7.20 and RM7.40 per share) – a significant premium from the EPF.

ADCB, which has been named by Euromoney as the “Most Improved Islamic Bank in the Middle East,” has certainly placed much confidence in Malaysia. The magazine also voted the ADCB as the best bank in the United Arab Emirates this year.

ADCB is 64.8% owned by the Abu Dhabi government through the Abu Dhabi Investment Council. Last year, ADBC earned 2.15bil dirham (US$580mil) and was the most profitable bank in the UAE.

It is easy to see why ADCB is interested in RHB. Despite its recent troubles, RHB still has strong branding. Its position in Islamic banking and regional offices makes it a prime candidate to become a regional financial services powerhouse.

Their partnership will help to secure Malaysia’s position as Islamic banking hub at a time when it is being challenged by several countries including Singapore.

We have plenty of reasons to be pleased by the Middle East money flowing here. All over the world, countries are chasing after funds from the Middle East. In short, the Arabs are being courted. Singapore’s ministers including Goh Chok Tong and Lee Kuan Yew are making regular trips to secure investment from Dubai and Abu Dhabi.

But the Abu Dhabi government sees Malaysia as the gateway to Asia. They like the political stability, economic fundamentals of the country, the long term economic planning and the fact that culturally and in terms of religion, we are closer to them than other countries in the region.

Note that many of their investments to date are long term in nature. When Mubadala, Kuwait Finance House, Aldar Properties pumped in an initial RM4bil into the Iskandar Development Region, they were investing in the future of Malaysia. Saudi Telecom has also bought a stake in Binariang GSM, for example.

The Al Rajhi Bank has become a household name in Malaysia although it has been operating in Malaysia for only a year.

Currently, the bank, owned by Abdul Aziz Al Rajhi and his four sons, has 12 branches. The bank plans to have 50 branches by 2010.

The Al Rajhi family is known to be the wealthiest non-royals in Saudi and among the world’s leading philanthropists while the bank is the world’s largest Islamic bank and a major investor in Saudi Arabia’s business world.

The Arabs have a reputation of being cautious, serious and even calculative in some ways. They do their homework and they drive a hard bargain before they put their signatures on any documents.

They do not believe in ribbon cutting, long ceremonies and publicity – what they want to see, as in any commercial deal, is a decent return to their investment. By putting their money in Malaysia, they certainly believe there is a profit at the end of the day.

When the consortium of prominent Middle East investors took control of Putrajaya Perdana, they had a long-term vision of making the boutique construction firm a much bigger player, especially in the field of energy efficient buildings in the region and in the Middle East. The point is this – these investors have confidence in the prospects of Malaysia.

The Abu Dhabi Investment Authority, for example, is among the oldest and largest in the world. Abu Dhabi also has one of the largest reserves in the world. So any investment that flows from there is backed by solid financial muscle and usually has the endorsement of the leadership.


Adopted from The Star 20 Dec 07'




Global Fund, Goldman Sachs also pump in fund to be stakeholder

Abu Dhabi strikes again.

On Monday, Related Cos., the developer behind the Time Warner Center in New York, said it had received a capital infusion of nearly $1.4 billion from companies including the investment arm of the Abu Dhabi government and Goldman Sachs (nyse: GS - news - people ).
At a time when the credit markets are still on the couch, the deal gives the private developer a fattened purse to fund future development.
Goldman and MSD Capital bought 7.5% equity stakes in Related, while an affiliate of Abu Dhabi's Mubadala Development the Olayan Group and an unnamed company made debt investments of an unspecified amount. The companies will invest with Related in future projects, the developer said.
MSD Capital manages money for Michael Dell, founder of the computer company Dell (nasdaq: DELL - news - people ).
The investments do not translate into any control over the company and there will be no management changes, Related said.
While Related's current projects are fully financed, the capital will help fund New York City residential and commercial projects in the future, the company said.
This summer, a spike in defaults and foreclosures on residential mortgages scared investors from many types of lending, including commercial real estate financing. Last month, Moody's Investor Services (nyse: MCO - news - people ) said its commercial real estate price index fell 2.1% in September, likely resulting from the credit squeeze.
Related is competing to develop a 26-acre site atop rail yards on the edge of the Hudson River in New York, with media and entertainment company News Corp. (nyse: NWS - news - people ) as the anchor tenant in its proposal. Other companies bidding to develop the site include Tishman Speyer, Extell Development, Brookfield Properties (nyse: BPO - news - people ) and The Durst Organization in concert with Vornado Realty Trust (nyse: VNO - news - people ).
Other current projects include a $3 billion Los Angeles development and the $3 billion Snowmass Village Resort in Colorado. Related completed the Time Warner Center in 2004.
Abu Dhabi has been taking advantage of low prices and turmoil in the U.S. markets, making a series of through various state-backed funds.
In late November, the Abu Dhabi Investment Authority dropped $7.5 billion into Citigroup (nyse: C - news - people ), the largest U.S. bank, after the company lost billions in write-offs related to subprime mortgages. (See “Abu Dhabi Pumping $7.5B Into Citi”)
Abu Dhabi also recently sunk its petrodollars into Advanced Micro Devices (nyse: AMD - news - people ), buying an 8.1% stake in the scrappy competitor to Intel (nasdaq: INTC - news - people ) (See “A Shot Of Oil Wealth For AMD”)
In late September the media investment arm of Abu Dhabi and real estate developer Al-Dar entered a multibillion-dollar joint venture to create a Warner Bros. theme park, a hotel, four multiplex cinemas, and a production fund for feature films and video games in the emirate. (See “Looney Dunes”)

From Forbes Dec 12, 2007

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