Istithmar World
Encyclopedia
Istithmar World is an investment firm based in Dubai
, United Arab Emirates
(UAE). This company is a state-run business owned by Dubai World
, a Dubai government-owned company, and was established in 2003. Originally known as "Istithmar," the company was renamed as "Istithmar World" in 2008.
Istithmar World, which was created in 2003 as the investment arm of Dubai World specializes in private equity and alternative investment opportunities globally. In the five years since its inception, Istithmar World has built a portfolio of investments in markets ranging from North America and Europe to Asia and the Middle East, and across a variety of sectors, including consumer, industrial, financial services and real estate.
An analysis of Istithmar's investment portfolio which included the investment of $3.8 billion with an associated $ 14 billion of debt, has not performed positively. In a number of cases, Istithmar has lost control of assets or sold at a loss. As a subsidiary of Dubai World, the company has been mentioned in numerous press reports related to the high debt levels of its parent. Since late 2009, the company has seen numerous departures of high profile executives.
Each of the divisions had its own management teams until a re-organisation was enacted at the end of 2009 and in early 2010. Istithmar World Capital saw the departure of its co-CIOs, John Amato and Felix Herlihy, who had joined the firm in 2006, who announced their departure in September 2009. On 20 January 2010, the CEO of Istithmar World Capital, David Jackson announced that he would be leaving the firm. Andy Watson, who had been promoted from CIO of Nakheel to CIO of Istithmar became acting CEO.
On 30 November 2009, Dubai World made a statement in an attempt to counter rumours and mis-understanding. In the statement, Dubai World indicated that Istithmar would not be part of the proposed restructuring process. Instead the restructuring process would focus on several property related subsidiaries, most notably Nakheel. The statement noted that the total debt subject to the proposed restructuring was circa $26 billion.
Existing and historic investments include:
In addition to preceding list of investments, the re-organisation of Dubai World, announced in October 2009, led to a number of other assets being transfer to Istithmar from an investment management perspective. These assets included Dubai World Africa, an investment vehicle for the African Continent. The flagship investment is the Victoria & Alfred Waterfront
in Cape Town, South Africa. Other investments include game reserves, wildlife conservation and eco tourism in Africa, with operations in South Africa, Rwanda, Comoros, Mozambique, Senegal and Zimbabwe.
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...
, 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...
(UAE). This company is a state-run business owned by Dubai World
Dubai World
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 Dubai government-owned company, and was established in 2003. Originally known as "Istithmar," the company was renamed as "Istithmar World" in 2008.
Istithmar World, which was created in 2003 as the investment arm of Dubai World specializes in private equity and alternative investment opportunities globally. In the five years since its inception, Istithmar World has built a portfolio of investments in markets ranging from North America and Europe to Asia and the Middle East, and across a variety of sectors, including consumer, industrial, financial services and real estate.
An analysis of Istithmar's investment portfolio which included the investment of $3.8 billion with an associated $ 14 billion of debt, has not performed positively. In a number of cases, Istithmar has lost control of assets or sold at a loss. As a subsidiary of Dubai World, the company has been mentioned in numerous press reports related to the high debt levels of its parent. Since late 2009, the company has seen numerous departures of high profile executives.
Istithmar's Divisions
Headquartered in Dubai, UAE, with offices in Shanghai, China and New York, United States, Istithmar World invests through its three separately-managed divisions: Istithmar World Capital, Istithmar World Aviation and Istithmar World Ventures.- Istithmar World Capital is the private equity and alternative investment arm of Istithmar World. Since inception, IWC has made over 35 investments.
- Istithmar World Aviation invests in fast-growing sectors of the aviation and aerospace industry, including airlines, manufacturing, engineering and financing.
- Istithmar World Ventures is a venture capital platform that provides promising start-ups and greenfield ventures with the necessary financial and managerial resources.
Board & Management
The Board of Istithmar is led by the Chairman, Sultan Ahmed Bin Sulayem who is also the also Chairman of DP World, a ports operator, Nakheel, a property company and other businesses. Other Board Members include Jamal Majid Bin Thaniah (Group Chief Executive Officer of Dubai World), Ahmed Bin Sulayem (COO of Dubai Multi Commodities Centre), Maryam Sharaf (CFO of Dubai World), Saeed Ahmed Saeed (CEO of Limitless), and Yuvraj Narayan (CFO of DP World).Each of the divisions had its own management teams until a re-organisation was enacted at the end of 2009 and in early 2010. Istithmar World Capital saw the departure of its co-CIOs, John Amato and Felix Herlihy, who had joined the firm in 2006, who announced their departure in September 2009. On 20 January 2010, the CEO of Istithmar World Capital, David Jackson announced that he would be leaving the firm. Andy Watson, who had been promoted from CIO of Nakheel to CIO of Istithmar became acting CEO.
Dubai related Financial Concerns
On 26 November 2009, the Wall Street Journal reported that Dubai World was seeking to sign a 6 month debt standstill agreement with its creditors. In response to the announcement Moody's and Standard & Poor's downgraded the debt of various Dubai government-related entities, with Moody's downgrading the affected agencies to sub-investment grade status. The effect of the announcement was wide spread fear in the global financial markets with a negative impact of equities markets around the world and a significant increase in the cost of insuring debt issued by Dubai related entities.On 30 November 2009, Dubai World made a statement in an attempt to counter rumours and mis-understanding. In the statement, Dubai World indicated that Istithmar would not be part of the proposed restructuring process. Instead the restructuring process would focus on several property related subsidiaries, most notably Nakheel. The statement noted that the total debt subject to the proposed restructuring was circa $26 billion.
Investment Portfolio
Istithmar World Capital states on its website that it has deployed $3.5 billion of capital in 35 investments across the globe. In an interview with the Financial Times in March 2009, the then CEO, David Jackson indicated that total assets under management by Istithmar had declined due to the global financial crisis and where $9 billion by the end of 2008. In the article, Jackson indicated that Istithmar had delivered returns of approximately 10% since its foundation. According to The Times in an article on 7 February 2010, Istithmar invested a total of $3.8 billion of its own capital from its foundation and took on an additional $14 billion of debt.Existing and historic investments include:
- HyfluxHyfluxHyflux Ltd is a global environmental solutions company listed on the Singapore Stock Exchange , with a market capitalisation close to S$735.4 million , and employs over 1,200 staff in China, India, the Middle East and North Africa region as well as Singapore and Southeast Asia.The company was...
, a Singapore base water utility. Istithmar bought a 20% stake in July 2004 for approximately S$ 25 million. Istithmar sold it stake in early 2009. In January 2010, Istithmar entered into a legal dispute with Hyflux over the potential exercise of warrants. - Time WarnerTime WarnerTime Warner is one of the world's largest media companies, headquartered in the Time Warner Center in New York City. Formerly two separate companies, Warner Communications, Inc...
, the US media company. Istithmar bought a 2.4% stake in February 2006, and hired Carl Icahn to work with them on the investment. In early 2006, Time Warner's stock price traded above $50 a share. Jackson disclosed the stake was sold in the second half of 2008, when the stock price was trading below $50 a share. - InterContinental Hotels GroupInterContinental Hotels GroupInterContinental Hotels Group plc is a global hotels company headquartered in Denham, United Kingdom. It is the largest hotels company in the world measured by rooms , and has over 4,500 hotels across over 100 countries...
. Bought in Sept 2007 and sold toward end of 2009. Jackson indicated that Istithmar made no return on the investment. - Barneys New YorkBarneys New YorkBarneys New York is a chain of luxury department stores headquartered in New York City. The chain owns large stores in New York City, Beverly Hills, Boston, Chicago, San Francisco, Dallas, Las Vegas, and Scottsdale, and smaller stores in other locations across the United States.Brands sold include...
, a retailer. Purchased for $825m in June 2008. In September 2009, Istithmar released a statement to counter rumours of a bankruptcy filing by Barney's. Despite Istithmar's wish to dispel rumours about the financial health of Barneys, the Wall Street Journal reported that US billionaire Ronald Burkle, who owns some of Barneys debt offered to convert his debt and an injection of an additional $50 million into Barneys in return for a 80% stake in the company. - Loehmann'sLoehmann'sLoehmann's is a chain of off-price department stores in the United States.Loehmann's is best known for its "Back Room," where women interested in fashion can find designer clothes at prices lower than in department or specialty stores...
, a specialty retailer in the USA, which Istithmar bought in July 2006 for $300m. The vendor was ArcapitaArcapitaArcapita Inc. is a Delaware-incorporated holding and real estate company, headquartered in Atlanta, Georgia....
, who had bought Loehmann's in October 2004 for $178 million. - Perella Weinberg PartnersPerella Weinberg PartnersPerella Weinberg Partners L.P. is an independent, privately owned, global financial services firm providing corporate advisory and asset management services to clients around the world. Launched in 2006 by Joseph R. Perella, Peter Weinberg, Terry Meguid and several other partners from prominent...
, a mergers-and-acquisitions boutique. Istithmar invested $100m for a 10% stake. - The Pension Insurance Corporation. Other shareholders in the Pension Corporation include JC FlowersJC FlowersJ.C. Flowers & Co. is a private equity investment firm, focused on investments in the financial services sector. The firm, founded in 2001, is based in New York City and run by billionaire J. Christopher Flowers, a former Goldman Sachs partner....
, JP Morgan, Coller CapitalColler CapitalColler Capital, founded in 1990 by Jeremy Coller, is one of the leading global investors in the Private equity secondary market ....
, Lloyds Banking GroupLloyds Banking GroupLloyds Banking Group plc is a major British financial institution, formed through the acquisition of HBOS by Lloyds TSB in 2009. As at February 2010, HM Treasury held a 41% shareholding through UK Financial Investments Limited . The Group headquarters is located at 25 Gresham Street in London, with...
, Och-Ziff Capital ManagementOch-Ziff Capital ManagementOch-Ziff Capital Management Group is an American hedge fund manager and global alternative asset management firm. In early 2011, the firm had more than $28 billion in assets under management....
, Royal Bank of ScotlandRoyal Bank of ScotlandThe Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
, SampoSampoIn Finnish mythology, the Sampo or Sammas was a magical artifact of indeterminate type constructed by Ilmarinen that brought good fortune to its holder...
, and Swiss ReSwiss ReSwiss Reinsurance Company Ltd , generally known as Swiss Re, is a Swiss reinsurance company. It is the world’s second-largest reinsurer, after having acquired GE Insurance Solutions. The company has its headquarters in Zurich...
. Istithmar committed in December 2006 to invest $170 million in the Pension Corporation. - Gulf Stream Asset Management, an asset management company. Istithmar acquired a majority stake in April 2008. At the time of the transaction, Gulf has $3.8 billion of assets under managementAssets under managementAssets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
. At the end of 2009 their stated assets under management had fallen to $ 3.6 billion. - GLG PartnersGLG PartnersGLG Partners, Inc. is an American global hedge fund sponsor that, as of 14th October 2010, is a wholly owned subsidiary of British alternative investment manager Man plc...
, a hedge fund based in London. Istithmar acquired its 3% stake directly from the founders of GLG in June 2007. The $3.4 billion reverse acquisition was calculated at a price of $10 a share. At the end of 2009, GLG's shares traded at $3.22 a share. - ESPA International, a spa and skincare treatments company. In April 2008, Istithmar acquired a 40% stake in ESPA
- Houghton Mifflin Harcourt, a publisher in the US. On 22 February 2010, Houghton Mifflin Harcourt announced that EMPG and HMH had reached an agreement to restructure the finances of the company and recapitalize its balance sheet with a substantial fresh cash investment by institutional investors. According to the Irish Times the investments by the current equity holders of EMPG, including Istithmar and others, will see their combined investment of over $3.5 billion written down to zero.
- EMPGIEMPGIEducation Media and Publishing Group International, more commonly known as EMPGI, is an education company with operations in China, India, Saudi Arabia, and Libya...
, an investment company focused on education in China and India. EMPGI was incorporated in May 2008 as joint venture between EMPGEMPGEducation Media and Publishing Group, more commonly known as EMPG, is a holding company registered in the Cayman Islands with no operating subsidiaries. It also has a minority interest in an affiliate that focuses on markets outside the USA called EMPGI...
, the holding companyHolding companyA 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...
that controls Houghton Mifflin Harcourt and Istithmar. - 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...
(ISS), a ports and marine management business. In February 2010, the Financial Times reported that Istithmar was looking for buyers of ISS for between $600–700m. Istithmar bought ISS for $285m. - Arcapita, an investment bank based in BahrainBahrain' , officially the Kingdom of Bahrain , is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.Bahrain is...
- Tamweel, a real-estate finance company. Istithmar has a 21.6% stake. In September 2008, Istithmar suspended two of its executives who were working at Tamweel pending an investigation into financial wrong doings. In August 2009, they were released on bail having been held without charge for a year. The company's shares have been suspended from the stock exchange since November 2008. However according to Bloomberg, in February 2010, the company is seeking permission to have its shares re-start trading. However the company needs circa $272 million for its operations.
- Standard Chartered BankStandard Chartered BankStandard Chartered PLC is a multinational financial services company headquartered in London, United Kingdom with operations in more than seventy countries...
, listed on the London Stock Exchange with a retail and commercial presence in over 50 countries with a focus on emerging markets. Istithmar has a 2.7% stake. Istithmar bought it stake for $1 billion in October 2006. - Bumrungrad International Hospital, a healthcare service provider in ThailandThailandThailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
and South East Asia - Cirque du SoleilCirque du SoleilCirque du Soleil , is a Canadian entertainment company, self-described as a "dramatic mix of circus arts and street entertainment." Based in Montreal, Quebec, Canada, and located in the inner-city area of Saint-Michel, it was founded in Baie-Saint-Paul in 1984 by two former street performers, Guy...
, an entertainment company. Istithmar bought a 20% stake in August 2008. In a related deal, Istithmar's sister company Nakheel agreed to a 15-year partnership to develop a permanent show on the Palm Jumeirah. In February 2010, a Canadian newspaper wrote that Istithmar may consider selling its stake, which it is estimated to have acquired for $600 million. - SpiceJetSpiceJetSpiceJet is a low-cost airline headquartered in Gurgaon, India. It began service in May 2005 and by 2008, it was India's second-largest low-cost airline in terms of market share. SpiceJet was voted as the best low-cost airline in South Asia and Central Asia region by Skytrax in...
, an Indian Airline. Istithmar invested a total of $50m in SpiceJet by December 2005. The entire 13.4% stake was sold in February 2010 for 1.74 billion rupees ($37 million). - Real estate in the UK. In November 2009, Bloomberg reported that the Great Portland Estates had acquired two building developments in London (one on Regent Street, another near Oxford Street) for £ 10 million and a share in future profits. Istithmar had acquired the two properties for £ 80 million two years earlier.
- Istithmar Hotels, a subsidiary initially formed in April 2006 to hold Istithmar's hospitality assets. Istithmar Hotels acquired a number of landmark New York properties including: W Hotel Union Square; Knickerbocker Hotel at Times Square; 280 Park Avenue; 450 Lexington Avenue; the Helmsley Building, located at 230 Park Avenue; and the Mandarin Oriental. The cost of the Mandarin Oriental was $340 million. At the time the price of $1.37 million was highlighted a big increase on the $1 million per room that Istithmar paid for the W Union Square. In Washington DC, Istithmar acquired the Hotel Washington in October 2006 for $150 million from Westbrook Partners who had purchased the hotel earlier that year for $120 million. In London, they acquired One Trafalgar Square. Other investments included a the purchase of a 25% shareholding in a Thai real estate developer, Raimon Land Public Company Limited.
- IHI plc. In December 2006, Istithmar Hotels invested Euro 178 million in International Hotel Investments, a Maltese company listed on the stock exchange. According to the Bond Prospectus of IHI issued in March 2010, Istithmar owns 33% of IHI. Istithmar made its investment at €1 a share. On 2 March 2010, the stock traded at Eu 0.80 a share according to the Maltese Stock Exchange website.
- Nakheel Hotels. In December 2007, Istithmar Hotels merged with its sister company Nakheel Hotels, keeping the name Nakheel Hotels, with CEO of the Istithmar division becoming CEO of the merged entity. At the time, the business was reported to have investments with a value of $ 3 billion. Projects that were highlighted included: Trump International Hotel and Tower (Dubai)Trump International Hotel and Tower (Dubai)Trump International Hotel & Tower was a proposed skyscraper hotel at the trunk of the Palm Jumeirah in Dubai. It was a joint venture between the Trump Organization and Dubai-based Nakheel, a government-owned company, and was announced on October 5, 2005. The hotel was expected to be a 300-room hotel...
on The Palm Jumeirah; Mandarin Oriental New York; W Union Square; Hotel Washington in DC; a significant equity stake in Kerzner International; a significant equity stake in IHI plc; and the QE2. In February 2008, Nakheel Hotels announced the acquisition of a 50% stake in a Mexican resort based on an enterprise valueEnterprise valueEnterprise value , Total enterprise value , or Firm value is an economic measure reflecting the market value of a whole business. It is a sum of claims of all the security-holders: debtholders, preferred shareholders, minority shareholders, common equity holders, and others...
of $ 315 million. In April 2008, Nakheel announced the investment of $375 million for a 50% stake in the Fontainebleau Miami Beach resort. The resort found itself in financial difficulty, and in March 2010, Istithmar and other equity holders had to offer an injection of an additional $100 million of equity. - Trump International Hotel and Tower (Dubai)Trump International Hotel and Tower (Dubai)Trump International Hotel & Tower was a proposed skyscraper hotel at the trunk of the Palm Jumeirah in Dubai. It was a joint venture between the Trump Organization and Dubai-based Nakheel, a government-owned company, and was announced on October 5, 2005. The hotel was expected to be a 300-room hotel...
. In December 2009 Donald Trump was interviewed on CNBC and asked about Dubai. The Trump Tower had been expected to be a $ 1.1 billion project with a 62 story building with penthouses costing $3,000 a square foot or $30 million a penthouse. Trump stated: I was going to do a deal there with Nakheel and they paid me a lot of money to go into a partnership and they were getting ready to start the building about a year ago and they were all excited and then the market collapsed on them. - The QE2 cruise ship. Purchased for $100 million from Cunard in June 2007. In February 2010, the Press Association wrote that Isithmar may sell the QE2, despite its prior plan to turn the boat into a luxury hotel, based at the Victoria & Alfred WaterfrontVictoria & Alfred WaterfrontThe Victoria & Alfred Waterfront in the historic heart of Cape Town's working harbour is South Africa's most-visited destination, having the highest rate of foreign tourists of any attraction in the country...
in Cape Town, South Africa. - Kerzner International. In July 2005, Istithmar entered into a partnership with Kerzner to build Atlantis, The PalmAtlantis, The PalmAtlantis, the Palm is a hotel resort at Palm Jumeirah in Dubai, United Arab Emirates. It is a joint venture between Kerzner International Limited and Istithmar PSJC and was opened on 24 September 2008. The resort is modelled after the Atlantis, Paradise Island resort in Nassau, Bahamas...
a resort at Palm Jumeirah in Dubai. The project was valued at $ 1.2 billion of which $500 million was equity from the shareholders. In March 2006, Istithmar led a consortium to take Kerzner International private in a transaction worth $3.6 billion. Istithmar increased its shareholding from 13% to 30% in the deal. - W Hotel, New York Union Square. The Times reports that Istithmar incurred a $283m loss, when it accepted $2m for its stake in the W Hotel, after it defaulted on its debts. LEM, an affiliate of Lubert-Adler Real Estate Funds now controls the hotel. On 1 March 2010, Bloomberg reported that the lender to Istithmar, 201 Park Avenue South PEH LLC, sued Istithmar claiming that "Istithmar had misappropriated approximately $3.2 million from an account established to fund renovations to the hotel and had improperly used these funds for its own personal uses" and over a $75 million loan guarantee.
- Knickerbocker Hotel. The Wall Street Journal reported on 3 March 2010, that Istithmar had defaulted on its $300 million mortgage to Danske Bank. In addition to the 300000 square feet (27,870.9 m²) building at 42nd and Broadway in New York, Istithmar had acquired an adjoining site for $ 76 million. The plan was to convert the building from its current use, an office block, back into an upmarket hotel.
In addition to preceding list of investments, the re-organisation of Dubai World, announced in October 2009, led to a number of other assets being transfer to Istithmar from an investment management perspective. These assets included Dubai World Africa, an investment vehicle for the African Continent. The flagship investment is the Victoria & Alfred Waterfront
Victoria & Alfred Waterfront
The Victoria & Alfred Waterfront in the historic heart of Cape Town's working harbour is South Africa's most-visited destination, having the highest rate of foreign tourists of any attraction in the country...
in Cape Town, South Africa. Other investments include game reserves, wildlife conservation and eco tourism in Africa, with operations in South Africa, Rwanda, Comoros, Mozambique, Senegal and Zimbabwe.