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Vol. 15 Issue 5 September 2010

Does jail work for debt?

Where have all
the IPOs gone?
The problem
with subsidies

HOGAN’S
TEST
Etihad CEO on
breaking even
by 2011

& 10 reasons Abu Dhabi

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Vol. 15 Issue 5 September 2010

COMMENT
12
Stock slide
Property market must bottom to
cheer bearish UAE equities

14
Dirty work
Companies are not bound to do
charity

16
Seven super-sectors
Trends that will define the future

BRIEFING
18
Gems disposal
Dubai World moots sale of prized
assets to cut debt

22
Defying gravity 38
Fiscal flexibility James Hogan of Etihad tells Gulf Business how the
Bahrain credit rating falls to A3 but global financial crisis pushed back break-even by a
it remains one of the agency’s highest
year. This issue also highlights the 10 top reasons why
Abu Dhabi is commanding the world’s attention.
23
Bourse discipline
Kuwait suspends firms for failing to
declare financial results 34 PEOPLE
Information overload
26 Workers now get interrupted every
58
Letters four minutes
Bullish bank
MENA President says the BoA-
28 Merrill Lynch merger was a painless
Chequeing in BUSINESS process
Does jail work for debt?
48 62
30 IPO no-show Board moves
Money managers Market volatility dampens appetite
Wooing the ultra-wealthy is the new of issuers
business mantra RESEARCH
52
32 Brain gain 65
Power struggle MBA enrolment rises as recession Data Monitor
How subsidies stifle true prompts career-makers to beef up Exclusive report on top deals and
privatisation their CVs. market indicators

September 2010 gulfbusiness 5

F
DETAILS
74
Editor-in-Chief
Obaid Humaid Al Tayer
Group Editor and Managing Partner
Ian Fairservice

Group Senior Editor

Gina Johnson
Group Editor
Catherine Belbin

Editor
Alicia Buller
Business Editor
Karen Remo-Listana
Sub-editor
Iain Smith
Editorial Coordinator-Business
Concessa D’Souza

Art Director Cris Domdom

Senior Designer B Raveendran

Contributors
Ryan Harrison

77
Michael Gordon

General Manager Production

and Circulation S Sasidharan
Production Manager C Sudhakar

General Manager Group Sales

Anthony Milne
Senior Advertisement Manager
Abraham Koshy
Advertisement Manager
Ajay Mathews

76
LIFESTYLE
73
Competition

74
Travel
78 Head Office:
PO Box 2331, Dubai, UAE
Tel: +971 4 282 4060, Fax: +971 4 282 4436,
Kuala Lumpur oozes capitalism and
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The new Porsche Cayenne reviewed
on the UAE’s mountain terrain.
77
Arts
Spotlight on the most coveted Islamic
art collections in Italy.
78
Desirables
Things to be seen with.
Tel: +971 2 677 2005, Fax: +971 2 677 0124,
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6 gulfbusiness September 2010

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BUSINESS
People matter
Great Places to Work enters the market with Gulf Business magazine.
A s the days of the boom grow more distant,
the recession has brought a cold hard dose
of reality to business across the board. Not least,
recruitment and employee retention. As today’s
companies gaze into their navels and wonder
where the profits went, it’s become increasingly
clear that business must be built on solid people
and solid fundamentals.
In a crucial indicator of growing interest
in HR, the Great Place to Work Institute has
ventured into the Middle East for the first time,
in conjunction with Gulf Business magazine, its
sole Gulf media partner.
The region, with its high-expat population,
transient nature and lack of legal rights for
employees, is not known for its human resources
finesse. But as companies have sized down
and slowed down, selecting the right staff has
become more of a concern.
MARKETS
Policing pay
Before bonuses can be regulated, SCA needs to get a firm hand on its members.
T he Middle East is waking up to the fact that
pay and incentives demand a strong risk
management structure.
Saudi Arabian Monetary Agency (Sama)
recently charged the CEOs of 11 major banks
with personal accountability for risk associated
with pay practices. In another nod to Gulf
regulation, the UAE’s Securities and Commodities
Authority (SCA) has ordered listed companies to
set up remuneration committees.
The committee comprises three non-
executive directors, with at least two of them
independent. The team ensures that pay
arrangements do not encourage executives to
make self-interested decisions, spelling bad
news for the company overall.
While reining in bankers’ bonuses is not
yet a major issue in the region, it is right that
companies set up the necessary tools to prevent
the contagion of the same problem that plagued
the developed markets.
COMMENT LEADERS
Great Places to Work will recognise the 20 best
workplaces in the UAE in terms of staff culture,
welfare and benefits. The programme is the first
annual ranking of the nation’s best employers
and the list will be announced in this magazine
in January 2011.
The Institute publishes similar lists globally,
including the Fortune “100 Best” in the US and
top companies lists with the Financial Times in
the UK and Nikkei Business in Japan. Companies
that regularly feature on the Great Place to Work
lists in other markets include Google, Coca Cola,
Novartis, IBM, Cisco, Telefonica, Kimberly Clark
and Microsoft.
With this step will come two things: a vehicle
of recognition for the companies that are getting
HR right, and a platform for raising awareness
of just how important people are in a region that
sorely needs it. ■
With the recession revealing the full extent
of banking bonus abuse, western firms are
unsurprisingly going heavier on cash-based
pay. According to a Towers Watson’s survey of
209 Fortune 500 companies, the pay mix has
changed from 44 per cent cash and 56 per cent
equity in 2009 to 46 per cent cash and 54 per
cent equity in 2010.
The compensation practices in the UAE and in
the wider Gulf however are difficult to compare
with the global norms because there is no
regulatory imperative to publish remuneration
reports for listed companies.
But true Gulf regulation is a long way off.
Currently, only 28 per cent of listed
companies and banks have remuneration
committee and 23 per cent have nominations
committee in the Gulf, shows data from a
Hawkamah survey. In the mean time, SCA
must show more teeth in obliging listed firms
to follow its rules. ■
September 2010 gulfbusiness 11
COMMENT EQUITIES
HOW TO HALT THE
UAE STOCK SLIDE
As the UAE stock market continues to drop, only loan growth and finalising
the Dubai World restructure will stem the tide.
MATEIN KHALID
T
he bear market in UAE shares has been as
painful as it has been protracted. Despite $80
crude oil and renewed investor appetite for
risk assets in emerging markets, the UAE stock
exchanges have greatly lagged the performance of Asian
exchanges and MENA markets. Bank loan growth is
a useful proxy for both cyclical economic growth and
liquidity trends in the Gulf.
While loan growth has exceeded 15 per cent at leading
banks in Saudi Arabia and Qatar, it is barely positive in the
UAE due to the overhang of distressed property and quasi-
sovereign loans. UAE bank earnings were weak thanks to
the financial black death in the property markets.
Most commercial banks in the UAE are burdened by
rising bad loans, shrinking fee income and sluggish
customer deposit bases while they
cannot issue Euro debt on the global
capital markets or meaningfully Fear, not greed, rules
reduce some of the highest loan/
deposit ratios in the Middle East. No
the roost on the two
valuation rerating on UAE bank shares major UAE exchanges
is possible until the end of the rising Both 1Q and 2Q
NPL cycle and the conclusion of Dubai
World’s restructuring. earnings in the
Institutional investors have not UAE this year were
returned to the UAE stock market
after their post-Lehman exodus in generally weak.
late 2008. UAE retail investors,
devastated by a four year old bear market, have slashed
exposure to the market. The trading volumes on the
DFM and ADSM have plummeted to 2003 lows, a
testament to investor apathy. Fear, not greed, rules the
roost on the two major UAE exchanges Both 1Q and 2Q
earnings in the UAE were generally a disappointment,
particularly among the bellwether banks and property
shares that dominate the local indices.
Emaar, for instance, boasts no less than a 26 per
cent weight on the Dubai Financial Market. So it was
only natural that Emaar’s 2Q 2010 profits miss was a
capitulation event on the DFM that ensured bearish
psychology remains dominant.
However, Emaar trades a third below book value at
AED 3.10. This is a distress valuation metric that does
not incorporate its recurrent revenues from malls, hotels,
12 gulfbusiness September 2010
education projects in the UAE, let alone overseas projects
that range from Syria to India.
Without an improvement in UAE macro metrics, it is
difficult to envisage a catalyst to attract international
fund managers to the Dubai and Abu Dhabi exchanges,
a necessary if not a sufficient ballast to trigger a
valuation rerating. The 3Q earnings season is not going
to be a catalyst for either a rise valuations rerating or a
rise in trading volumes. The number of brokerage firms
who have shut down suggests that industry insiders
expect a protracted bear market in the UAE. Summer
and Ramadan will only accentuate a period of listless
trading volumes.
The ADSM in Abu Dhabi has hit new lows for 2010 as
the delisting plans of Aaabar and the credit rating
downgrade of Aldar has hit investor
sentiment. Volumes in Abu Dhabi have
plunged to 40 – 50 million shares, a
fraction of levels three years ago. The
recent bout of global risk aversion is
also bearish for crude oil prices as
Chinese industrial production slumps
while the dollar surges on safe haven
buying. This macro milieu is bearish
for Abu Dhabi equities.
Emaar, could trade in a range of
AED 2.80 to 4 as 0.6 times book value
is a floor when the Emaar MGF IPO
in India and recurrent revenues in retail/hotels/education
provide a valuation anchor to the franchise. Emaar must
convince investors that it can offer earnings growth, as
cheap value is not sufficient without EPS momentum
or a convincing catalyst. This catalyst could well be a
successful restructuring of Dubai World so analysts can
begin to model credible haircuts on bank
loan growth data.
Moreover, most UAE banks need to exhibit convincing
loan growth, as NBAD has done. Above all, the property
market must bottom and the infrastructure project
pipeline must resume. A year end rally in UAE equities
might then be something more than a battered bull’s
midsummer night dream.
Matein Khalid, fund manager in a royal investment
office and writer in finance and geopolitics.
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COMMENT CSR

FIRMS SHOULD GET HANDS

DIRTY WITH CHARITY
Corporate social responsibility is a hollow phrase when there is no genuine
feeling involved and individuals should do their personal bit instead.
MISHAL KANOO

T
he new in thing in the corporate world is donating are, or under the freedom of religion as they cannot have
to charities. Every company is jumping on the one. The people who work in them, by contrast, should be
Corporate Social Responsibility (CSR) bandwagon, extend these rights as they are living, breathing people.
desperately trying to show how important it is in If a company wishes to be charitable, then they must get
their value statement. the consensus of their shareholders and form a foundation.
Mostly done for PR’s sake, it is sickening to see how some Foundations, in contrast with companies, are set up with the
corporate companies try desperately to outshine each other very purpose and consent of the shareholders of giving back.
in showing a false care. In some cases, companies who This is the proper way that people who own companies
produce things that kill have the audacity to say that they need to give back to society. But this rarely happens for a
care for the society. Yet if we really looked at what they simple humanistic reason — we are lazy.
produced, we would be appalled. The ones who support collective out pouring of money on
The worst case I can think of is a large Multi National society believe so because it is less of a hassle for them. If
Corporation (MNC) that manufactures tobacco. At the people really got off their soft and comfortable sofas to see the
beginning of this decade, the European powers banned pain of others, they would be hard pressed not to take action.
tobacco adverts in certain high visibility areas such as the But when money is given away and others do the “dirty”
Formula One races, to protect the most work for them, they can still, mentally
defenceless segment of society – children. I don’t believe that speaking, continue on their merry way,
The guilty company, which I will not feeling that they have done some good
name, spent $150 million on charitable companies should be without really altering their lives.
works globally to show it cares for the required either legally, This behaviour can clearly be seen in
society. If the story ended there, then I calls for money where people put money
would have no argument to make.
or morally, to give in a plate and go back home not caring
But then they spent another $250 back to society. This whether this money will positively affect
million on advertising that they spent the recipient or even reach them.
$150 million on these charitable works.
is not what they were I do believe that we all have a duty to
Here is my argument. I don’t believe mandated to do by give back to the society that provides
that companies should be required
either legally or morally to give back to
their shareholders. us with all that we need as well as to
think of the less fortunate ones in it.
society. This is not what they were mandated to do by their But I do not believe that the way it is being done these days
shareholders. is done for the right reasons.
On the other hand, their shareholders and management Some might consider the means is not important because
have a social responsibility to society on a personal basis. the end result is what counts. I disagree as it is only by
It is they who must spend money on good works and making sure that human contact is felt that we can all
charity from their own and not that of a company. thrive and prosper. The recipient needs to see that the
To help bridge this concept in the reader’s mind, let me person, who is kind to him or her, actually cares.
take the issue of Zakat. From a religious point of view, it If I am wrong, remember this the next time you give your
is the individual who will be held accountable for paying child a gift but never see him or her for days. The child
or holding back the Zakat with the Creator. It is not a needs to know that the parent gives him or her gifts not to
collective responsibility but an individual one. make up for their absence but because of the love that they
The reason I say this is because MNCs are non-entities. feel towards them. This is no different for those who are on
We have made the mistake of considering companies as the receiving end of anonymous charity. After all, no matter
living beings. They are not. We extend human notions to how big and strong we grow up to be as adults, we are still
them when they are not. They should never be protected children at heart.
under freedom of speech, which in some countries they Mishal Kanoo, deputy chairman, Kanoo Group.

14 gulfbusiness September 2010

COMMENT FUTUROLOGY

SEVEN TRENDS THAT WILL

DEFINE THE FUTURE
As the world’s demographics shift, the emerging markets will reignite real estate,
finance, commodities, luxury, genetics, green energy and IT.
PETER COOPER

I
n his new book Supertrends Danish futurologist
and entrepreneur, Lars Tvede, looks a decade or
more into the future. He thinks the best future
lies with seven supersectors: finance, real estate,
commodities, alternative energy, luxury, IT and
biotech/genomics.
Finance is an odd choice as we are still living with
the effects of the global financial crisis of 2008, and
there is probably a good deal more deleveraging or debt
reduction to come. Yet, looking forward, the urbanisation
challenges of the emerging markets like China and India
surely mean a boom for finance.
Even in the UAE, you can imagine housing finance as
a new boom sector going forward. The problem is that
the financial sector may go through another rough patch
before it gets very much better. The
recovery from 2008 has been too quick
to be true. The world’s
Real estate comes with a similar population will
warning on timing. That said if you
look at the US and UAE real estate grow by two
markets there are some great bargains billion within 40
now. It is just that the correction may
not quite be over.
years and these
The world’s population will grow by folk have to live
two billion within 40 years, and these
folk have to live somewhere. Over the
somewhere.
same timeframe Supertrends predicts
a wealth explosion, up 200 to 300 per cent in developed
markets and 400 to 600 per cent in what today are
emerging markets.
Massive urbanisation will result. This has been a
trend over the centuries after all. Between 2010 and 2050
some 100 million new urban residents will have to be
accommodated every year, mainly in low cost units. India
and China will see the biggest urban expansions.
Then again, as the rich countries get richer, the
demand for second homes will mushroom. The best
locations are going to be in short supply and the
price will go up. Land is not a commodity that can be
manufactured, unless you think of Dubai and its
famous palm islands.
And once the Chinese reach the level of affluence that
leads to the buying of second homes, that will unleash a
powerful buying wave. For where to buy real estate you
should consider access to transport, low taxes, the rule
of law and natural resources, and where people want
to work, argues Tvede. The Mobile Wealthy Residency
Index rated destinations by 11 factors important to
rich people and came up with the following list in 2009:
Switzerland, London, Singapore, New York, Hong Kong,
Jersey, Cayman Islands, Isle of Man, Monaco, Dubai and
Guernsey in that order.
Commodities also look a sure thing as China and
India grow and the US pushes dollars into the global
economy to support its recovery. That is good news for
an earlier than expected recovery in the UAE. As
investment guru Marc Faber argues, deflation will
never be allowed to happen and helicopter drops of US
dollars can mean only one thing for
commodity prices going forward. They
will go up.
Alternative energy looks a winner,
if only because higher oil prices will
make it more and more competitive.
In the 1970s this was a boom area
despite a poor global economy.
On luxury I am less certain. Tvede
argues that the emerging markets will
unleash legions of new consumers
anxious for Cartier watches and
Ferraris. But emerging markets are
notorious for their own volatile business cycles, and
I wonder if this is not getting too carried away with
projecting straight lines from present growth rates.
Information technology is an obvious yes, given that
technology like iPads and iPhones continue to transform
our lives. But this will increasingly be dominated by a
number of very large and powerful companies, and I
think the entrepreneur is going to be squeezed out. There
is still too much capacity in some areas of IT for anybody
to make a serious profit.
Biotech and genomics – the study of the human
genome or DNA structure – are again another certainty
for a mushroom in business activity, but this is even
more highly specialised than IT. You could not imagine
researching the human genome on your kitchen table!
Peter Cooper, editor of arabianmoney.net

16 gulfbusiness September 2010

BRIEFING UAE
Dubai World moots
sale of prized assets
Dubai World plans to
sell its prized assets over
a period of eight years
to generate as much as
$19.4 billion to pay off
creditors, according to a
restructuring document
obtained by Reuters.
The state-owned
conglomerate told creditors
at a July 22 meeting, held
at Dubai’s Atlantis Hotel,
that its capital structure
was inappropriate
and needed “urgent”
restructuring, according to
the document handed out
at the meeting.
Dubai World, the
conglomerate with
investments ranging
from luxury hotels to
theme parks, said in the
document asset disposals
over an eight-year period
will help generate up to a
maximum of $19.4 billion,
while similar sales based
on current prices would be
worth a maximum of $10.4
DEBT
DIFCI to roll-over
$3 billion debts
Dubai International
Financial Centre
Investments (DIFCI) is in
the hot seat as it struggles
to roll-over its more than
$3 billion of debts against
the backdrop of weak
earnings and operating
cash flow.
Standard and Poor’s
(S&P) removed DIFCI from
CreditWatch negative
but warned that it has
to sell more assets to
put the company on
18 gulfbusiness September 2010
billion. It projected mid-
point disposal proceeds of
$17.6 billion.
“DW (Dubai World)
lender recoveries (will be)
significantly enhanced if
DW is given time to rebuild
and realize value over a
five to eight year horizon,”
the document said.
Dubai World’s document
shows the company
proposed to dispose of
its “investment assets”,
including its stakes in
luxury retailer Barney’s,
Dubai-based Atlantis
F
Hotel, and casino
operator MGM Resorts
International, over a period
of five years.
It has identified ports
operator DP World, Jebel
Ali Free Zone and Dubai
Maritime City (DMC) and
Dry Docks World as its
“strategic assets” which
may generate up to $11.8
billion when put on sale
over a period of eight years.
self-sustainable footing.
It said the outlook
remains negative due to
uncertainties over the
timing and success of
an ambitious disposal
programme for DIFCI.
At the end of 2009, the
investment arm of DIFC
had a $3.1billion debt,
which it plans to reduce
through a restructuring
plan, which will see the
divesting of its non-core
investments by the end
of 2011.
S&P believes the
government will continue
to support DIFCI.

AVIATION
Emirates unveils
extra US flights
Emirates has launched
its second daily flights to
Los Angeles and Houston.
The airline, which
recorded a significant
increase in revenue for
the Americas in 2009-
10, will soon offer over
15,000 seats on 98 return
flights per week to the
United States.
Starting October 31,
for Los Angeles and
November 1 for Houston,
FINANCE
Aabar holders
approve delisting
Shareholders in Aabar
Investments, the largest
stakeholder in luxury
carmaker Daimler AG, has
approved plans to take the
company private and delist
Aabar’s shares from Abu
Dhabi’s stock exchange.
The decision required
approval of shareholders
representing 75 per cent of
the company’s share capital.
Aabar, majority owned by
the Abu Dhabi government’s
International Petroleum
Investment Company
(IPIC) said in June that it
wanted to delist for “greater
operational flexibility” for
investments.
BANKING
Provisions to
increase in H2
Provisions by the UAE
banks accounted for half
of those taken by the Gulf
banks in the second quarter
this year, followed by Saudi
Arabia, which contributed
23 per cent.
Provisions are expected to
increase further in coming
quarters, which will result
in UAE banks witnessing
decline in profitability.
Emirates will fly non-stop
to both cities twice a day
on Boeing 777 aircraft.
Since the airline
launched its first flight
to New York in 2004, the
value of trade between the
two nations has almost
tripled, reaching $12.7
billion in the 12 months
to June 2010.
Emirates will also add
a total of 129 additional
services to and from the
Kingdom of Saudi Arabia
across August, September
and October, adding to the
DEBT
85 per cent of
UAE in deep debt
A survey by a credit
counselling and debt
management company
reveals 85 per cent of UAE
residents are in debt and
landing many in prison.
The survey, carried out by
the International Swiss
Debt Management (ISDM)
Consultancy, says, 75 per
cent of debtors are male and
25 per cent female.
SHIPPING
DPW H1 profit
up 10 per cent
DP World’s half profit
climbed 10 per cent
compared with the year
earlier period, while
seasonal trade flows and
the contribution from
new terminals will likely
contribute to a stronger
performance in the second
six months of 2010.
DP World said net profit
in the first half amounted to
$206 million, up from $188
million a year ago. Revenues
in the six-month period
grew five per cent to $1.46
billion, while consolidated
throughput increased seven
per cent to 13.2 million
September 2010 gulfbusiness
UAE
carrier’s already robust
service schedule. Jeddah
and Riyadh will benefit
from the extra services
put in place to serve
the thousands of people
travelling to the Kingdom
throughout Ramadan and
Eid.
Emirates received
permission from the
Saudi Authorities to
operate a portion of
these flights for Umrah
passengers and the
remainder of the flights
for regular traffic.
twenty-foot equivalent
container units or TEUs.
ECONOMY
Job vacancies up
33 per cent in Q2
The UAE has enjoyed a
33 per cent rise in the
number of vacancies in
the second quarter of 2010
compared with the first
quarter of the year, and a
45 per cent rise compared
with the same period last
year, a new survey shows.
According to FiveTen
Group, a global
recruitment firm,
confidence is returning
to the economy across
the UAE, as global trade
increases and rising oil
prices benefit the region.
A more positive
outlook for the region
is being reflected by the
banking and finance
industry hiring again,
the survey said. Ongoing
government investment
in infrastructure is
also resulting in more
jobs in fields such
as IT and telecoms.
Continuing progress on
the restructuring of the
Dubai World debt is also
allaying concerns.
19
SAUDI ARABIA
REAL ESTATE
Moody’s places Dar Al-Arkan on review
Moody’s Investors Service
placed on review for
potential downgrade
the Ba2 ratings for Dar
Al-Arkan Real Estate
Development Company,
Saudi Joint Stock
Company (DAAR), Dar
Al-Arkan International
Sukuk Company II (DAAR
ISC II) and the $450
million sukuk.
Moody’s decision
AVIATION
Sama ceases
operations
Sama, one of two low-cost
airlines in Saudi Arabia,
stopped its services from
August 24 as the company
failed to get government
support and find investors
after incurring $266
million losses.
Government help in the
form of fuel subsidies and
the removal of price limits
on domestic routes failed to
materialize, the Dammam-
20gulfbusiness September 2010
followed the company’s
reporting of weaker
operating performance
in the first half of 2010
as compared to 2009
and higher shareholder
remuneration payments
than originally expected by
Moody’s.
The review, which
Moody’s expects to conclude
by the end of October, will
focus on the year-to-date
based airline’s CEO Bruce
Ashby said. “We also tried
to find strategic investors
who are ready to invest in
the company and pump
the necessary liquidity to
enable Sama to operate.”
MARKETS
Three firms fined
for violations
Saudi Arabia’s Capital
Market Authority (CMA)
fined three firms a total
of SAR150,000 ($40,000)
F ($2.8 billion) in June, from
operating performance and
how changing expectations
with respect to how the
Saudi homebuilding
market is likely to evolve
will impact the company’s
operating performance,
investment and cash
flow expectations going
forward relative to the
guidance the credit agency
had originally provided for
the rating.
for violating the rules
of the Arab world’s
largest bourse.
Al-Ahli Takaful, Saudi
International Petrochemical
Company (Sipchem), and
Saudi Fransi Cooperative
Insurance were each fined
SAR50,000 for violating
the exchange rules in their
2009 financial statements.
In recent months, the
oil-rich kingdom’s market
regulator has asserted
more control over the
stock market in an effort
to stamp out manipulative
and speculative trading,
and attract more stable
institutional and
foreign investors.
The CMA issued its
first prison sentence in
August last year, locking
up the former chairman
of Bishah Agricultural
Development Company for
three months, and fined
Prince Ahmed bin Khaled
Al Saud, the chairman of
Saudi Chemical Company,
for disclosure violations.
ECONOMY
Non-oil exports
rise 22 per cent
Saudi Arabia’s non-oil
exports increased 22 per
cent to SAR10.7 billion
SAR8.7 billion in the year-
earlier period, data from
the Central Department of
Statistics and Information
(CDSI) showed.
The kingdom’s imports
in June inched down one
per cent to SAR29.2 billion,
compared with SAR29.5
billion in the corresponding
period in 2009, according to
the CDSI data.
INFRASTRUCTURE
Causeway to cost
SAR1 billion
The preliminary cost for the
expansion and development
of the King Fahd Causeway
– that links Saudi Arabia
to Bahrain – is estimated
at nearly SAR1.07 billion
($284.8 million), pan-Arab
daily Al Hayat reported.
The studies are likely
to be completed in March
2011. The King Fahd
Causeway Authority is
expected to award the deal
in July 2012. The project is
scheduled for completion in
December 2015, according
to the daily.

TELECOMS
Qtel Q2 profit
falls 45 per cent
Qatar Telecom (Qtel),
which provides
telecommunications
services in 17 countries
from Asia to Africa,
reported a 45 per cent
decline in second-quarter
profit after a one-time
gain from license-fee
changes wasn’t repeated.
Net income fell to
QR571 million ($157
million) from QR1.04
billion a year earlier.
Profit in the second
quarter of last year “was
higher due to one-off
items including a reversal
of a provision resulting
from the positive outcome
of the Ministry of
Communication license
fee decision in Kuwait,”
it said.
Qtel, which holds a
controlling stake in
Indonesia’s second-
biggest phone operator, PT
Indosat, said consolidated
customers jumped 30 per
cent to 66.6 million at the
end of June. The company
also controls Nawras in
Oman, Asiacell in Iraq,
and Wataniya Telecom,
which operates in Kuwait,
Tunisia, Algeria, Saudi
Arabia, the Maldives and
the Palestinian Territories.
BANKING
CB cuts overnight
deposit rate
Qatar’s central bank cut
its overnight deposit rate
by half a percentage point
to 1.5 per cent, its first
such move in two years,
after the US repeated its
pledge to keep rates low
for an extended period.
Qatar’s overnight
deposit rate was last cut
by 25 basis points to two
ENERGY
Qatargas 4 back on track
Major construction work
at the Qatargas 4 liquefied
natural gas facility and at
the Pearl gas-to-liquids
plant will be completed
by the end of the year,
with output set to ramp
up next year, Shell said.
Shell holds a 30 per
cent stake in the 7.8
million tonne per year
LNG project which,
when completed, will
per cent on May 1, 2008.
The lending rate, which is
the key measure used by
the central bank to convey
signals to the market, was
held at 5.5 per cent.
Qatar experienced three
years of inflation above
10 per cent, peaking
at 15 per cent in 2008.
Consumer prices declined
by 2.8 per cent in June,
following one drop of 3.6
per cent in May. The Qatari
government has predicted
inflation will accelerate to
1 per cent this year from
deflation of 5.5 per cent
last year.
cement Qatar’s position as
the world’s biggest LNG
exporter.
Late last year Shell said
it had delayed the start up
of the $8 billion Qatargas 4
project to late 2010 because
contractors were struggling
to keep up with the pace
of developments in Qatar’s
booming gas industry, with
the first cargo possibly
pushed into 2011.
AUTOMOTIVE
Mini’s H1
sales triple
Alfardan Automobiles,
the exclusive importer
for Mini in Qatar, said
there was a 200 per cent
increase in sales of Mini
cars during the first half of
2010 compared to the same
period last year.
The Mini brand also
gained market share against
its competitors to lead
the automotive segment
in Qatar with a 39.6 per
cent market share between
January-June 2010.
September 2010 gulfbusiness
QATAR
The delay helped reduce
oversupply in the global
LNG market earlier this
year. State-run Qatar
Petroleum owns 70 per
cent of Qatargas 4.
Qatar aims to raise its
annual LNG production
capacity to 77 million
metric tonnes by the end
of this year with the start
of the final two of 14
production plants. The
country has started four of
the world’s largest plants
since last year.
SHIPPING
Nakilat receives
final tanker
Qatar Gas Transport
Company (Nakilat) took
delivery of the Rasheedaa
Q-Max class tanker, the
last of 54 vessels ordered
by the company.
The Rasheedaa, one
of the 14 largest LNG
tankers in the world, was
constructed at Samsung
Heavy Industries Company
facility in South Korea
and will be used by Qatar
Liquefied Gas Company
under a long-term charter.
21
BAHRAIN

BANKING
Ithmaar Bank’s
provisions for
impairment drop
Ithmaar Bank, a Bahrain-
based retail-focused
Islamic bank, said it swung
to a net profit attributable
to the bank>s shareholders
of $332,000 in the second
quarter of 2010 from a loss
of $35.5 million in the year
earlier period. Ithmaar’s
overall loss narrowed to
$1.9 million from a loss
of $36.45 million in the
second quarter of 2009.

BANKING
Banking assets
drop 10 per cent
ECONOMY

Bahrain’s fiscal flexibility Fdown

Assets of Bahrain’s banking
system dropped 10 per cent
to $211.5 billion at the end
of June 2010 from $236
billion a year earlier, central
bank data shows.
The value of the assets
at the end of June 2010,
however, was higher than
their value in May and April
of the same year.The banks’
assets hit record levels of
more than $264 billion at
the end of the third quarter
of 2008 before they started
to decline under the impact
of the global financial
crisis. Bahrain’s banking
system’s assets at the end of
June 2010 are worth almost
10 times the country’s gross
domestic product, which
amounts to about
$22 billion.
POLITICS
Bahrain says no
to Iran attacks
Bahrain’s foreign minister
has ruled out allowing
the US to launch attacks
on any country from
Bahraini territory.
“The presence of a US
naval base in Bahrain does
Moody’s Investors
Service downgraded
Bahrain’s sovereign
ratings one notch to
’A3’ from ’A2’, saying
increased spending and a
modest level of financial
assets has reduced the
government’s fiscal
flexibility, making it
not mean that Manama
will allow its use to launch
an attack on any country,”
Shaikh Khalid Bin Ahmad
Al Khalifa said in an
interview with the London-
based Asharq Al Awsat.
“The agreements signed by
Manama with Washington
are exclusively defence-
based and we cannot allow
the use of our lands to
attack other territories. In
fact, there are no attack
weapons on the base.”
The minister said the
defence agreements were
meant to preserve safety
and security in the Gulf as
a highly significant water
way and vital area for
global economy.
potentially harder to
meet liabilities from the
country’s financial sector.
Moody’s outlook
on Bahrain’s local
and foreign currency
government bond ratings
is now stable, the ratings
agency said.
Moody’s said a gradual
MARKETS
GFH approves
capital hike
Bahrain’s Gulf Finance
House’s board approved
a capital hike by $300
million and appointed
Deutsche Bank to advise
on the investment bank’s
restructuring process.
GFH, which halved its
first half net loss to $47.7
million from a net loss of
$92.1 million in the same
period last year, said it
got necessary approvals
to increase its capital
to finance the bank’s
expansion during the
coming period, GFH said in
a statement on the Dubai
but significant rise over
recent years in the break
even budget oil price,
coupled with a relatively
modest level of official
financial assets, has led
to a divergence between
the government’s fiscal
flexibility and that of
rating peers.
Financial Market web
site. The board of GFH
decided to re-capitalize
GFH «by way of issuing
equity linked convertible
murabahas or similar
instruments to raise up to
$300 million».
BANKING
UGB H1 profit
doubles
United Gulf Bank (UGB)
said its net profit for the
first six months of the
year more than doubled to
$31.8 million as the firm
offloaded its commercial
banking assets and focused
on investment banking and
asset management.

22 gulfbusiness September 2010


FINANCE
Bourse
suspends
firms
At least five of the 24
listed firms suspended
from trading in the Kuwait
Stock Exchange (KSE) have
been reinstated, a senior
official told Gulf Business.
The bourse suspended
trading in shares of these
firms for failing to declare
their second quarter
financial results on time.
“Companies have started
to file their financial
results. Five of them have
been removed from the
suspension list,” Naser Al
Nafisi, general manager
of Al Joman Centre for
Economic Consultancy,
said. A statement posted
on the KSE website said
the companies – 18 of
them investment firms
hit by the global financial
crisis – failed to announce
financial results for the
April-June period within
the stipulated 45 days.
Twelve of the firms had
already been suspended
for not declaring results
for previous periods. The
suspensions will end
once companies announce
results, it said.
KSE has around 210
listed companies with
capitalisation of more than
$112 billion.
ECONOMY
Healthy budget
surplus expected
OPEC member Kuwait is
expected to post a budget
surplus of up to $19.6
billion in the current fiscal
year despite boosting
spending by 33 per cent, a
report said on Wednesday.
The National Bank of
Kuwait (NBK), the emirate’s
largest lender, said in the
report that the size of the
surplus would depend
on the price of oil, which
contributes more than
94 per cent of the Gulf
state’s revenues.
The budget surplus for
the 2010-2011 fiscal year
(April 1 to March 31) is
forecast to range between
$”3.2 billion and $19.6
billion depending
on oil price scenario,”
NBK said.
The budget, passed
by parliament in June,
projects a deficit of $22.7
billion at the assumption
of an oil price of $43 a
barrel while actual price
has so far been between
$70-80 a barrel.
INVESTMENT
Global narrows
Q2 losses
Global Investment House
narrowed its losses in
the second quarter 2010
to KWD20.1 million ($70
million), compared to a net
loss of KWD29.7 million a
year earlier. The investment
bank’s first half net
losses more than halved
to KWD35.48 million,
down from a loss of
KWD99.7 million in 2009.
Global’s total assets fell to
KWD773.7 million at the
end of June 2010, down
from KWD832.7 million
at the end of 2009.
BANKING
CB sells $348
million bonds
Kuwait’s central bank
sold KWD100 million
($348 million) of one-year
treasury bonds with a
coupon of 1.25 per cent.
Investors submitted
KWD492 million in bids for
the bonds, the central bank
said on its website.
The bond matures on
August 10, 2011.
INVESTMENT
Dar not up for
liquidation
Kuwait’s Investment Dar,
which owns half of British
carmaker Aston Martin,
September 2010 gulfbusiness
KUWAIT
is not up for liquidation
as it moves ahead with
a restructuring plan,
its chairman said.
”This company is not
up for liquidation. If it
were, we would have
liquidated it a long time
ago,” Adan Al-Musallam
told reporters after
an extraordinary
shareholders meeting.
He said the firm invested
in hard assets and said
he was confident Dar will
”make a strong comeback”
after restructuring.
FINANCE
Capital Standards
to rate KSE firms
Kuwait’s rating company,
Capital Standards, said
it will issue this month a
rating of companies listed
in Kuwait Stock Exchange
(KSE).The agency’s
chairperson, Amani
Burisli, told KUNA that
Capital Standards, like
other rating companies
operating in the Kuwaiti
market, is supervised by
external bodies.
23
OMAN
SHIPPING
Salalah H1 port volumes
up 66 per cent
Oman’s Salalah Port Services
Co (SPS) has reported a 66
per cent rise in volumes
handled at the General
Cargo Terminal during the
first six months of this year
the Oman Daily Observer
has reported. The general
cargo terminal recorded a
throughput of 2.92 million
tonnes during the first
six months of this year,
ENERGY
June crude
output declines
Oman produced less crude
and condensate in June
and achieved higher prices
for both commodities,
the government said.
Oman’s output of crude
and condensate slipped
by seven per cent to 25.3
million barrels in June
from 27.2 million barrels
in May, according to the
Ministry of National
Economy data.Omani crude
prices rose to $83.70 a
barrel in June from
$77.77 a barrel in May,
the data show.
Oman produced 155
million barrels of oil in the
first half of the year, up
from 143 million barrels in
the first half of 2009.
24 gulfbusiness September 2010
compared to 1.762 million
tonnes during the same
period last year. The port’s
container terminal recorded
a throughput of 1,751,000
TEUs, a growth of seven
per cent for the period. The
main drivers of the growth
in volumes were increase in
direct services by existing
customers and volume from
a new customer.
DOWNSTREAM
New Oman oil
refinery for Q4
Bharat Oman Refineries
Ltd. is expected to start
commercial production
at its 120,000 barrels a
day refinery in the central
Indian state of Madhya
Pradesh in the October-
December quarter, India,
a junior oil minister said.
“The overall cumulative
physical progress of (the)
refinery project is 99.7
per cent,” Jitin Prasada
told lawmakers in a
written reply to the lower
house of parliament. “The
commissioning of a captive
power plant is in progress
and the refinery is expected
to commence commercial
production during the third
quarter 2010-11.”
30
Seconds to
make sense
of… investment
banking
Suresh Kumar
CEO of Emirates NBD Capital
& Emirates Financial Services PSC
What is investment banking?
It is the intermediary that connects up the individual,
corporate and institutional customers to the market place.
How is it different from retail and commercial banking?
Retail and commercial banking typically take deposits
and lend money. Investment banks generally do not take
deposits. They would lend money for working capital,
trade finance, purchase of assets and others on a bilateral
basis or on a group basis but that would be loans and
not in the form of bonds or sukuk. The moment it gets
securitised or structured into an offering for an audience
by way of specific security then an investment bank
comes into the picture. F
How do investment banks make money?
For retail and commercial banks, it is the spread between
the cost of funds, which is the cost of raising deposits and
the cost of lending or the revenue they get from lending
the same money. For an investment bank, you get revenues
from advisory fees, management fees, underwriting fees
so it is generally fee-structured. Some investment banks
also trade in and make a market so when I am making a
bond issue for a big name, I am prepared to quote a two-
way price for this bond in the secondary market, bid an
offer price, for which I will take up to 5-10 per cent of the
issuance.
What kind of impairments do you have?
There are no NPLs or loan impairments. However, if you
have underwritten a poor issuer and there are no takers
of the bond and you end up owning the bonds then you do
have value impairment. If you are trading – you bought it
at five and now it is trading at four - then you may have
price impairments.
Investment banks have been tainted by the collapse
of Lehman Brothers and Bear Sterns. What really
happened?
Investment banks leveraged or borrowed heavily
compared to commercial banks, which have supervision
and capital adequacy rules. Basel 1 expects eight per
cent while Basel 2 is on a risk-adjusted basis. Some
investments banks – those that have failed – operated
with 40 to 60 times leverage so if they have one capital
they have a balance sheet of 60. That excessive leverage
almost acts like a steroid in a bull market. But in a bear
market, it can be a vicious killer.
Security in
Private Banking.

For us, private banking means gaining trust by providing

security. Also yours: +971 4 428 82 00 or www.claridenleu.com
Clariden Leu Asset Management (Dubai) Ltd., Dubai S W I S S P R I V AT E B A N K I N G S I N C E 17 5 5

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F
COMMENT LETTERS

LETTER OF THE MONTH

THE FUTURE’S PLASTIC: ABU DHABI’S PLANS TO BE A POLYMER POWERHOUSE
Vol. 15 Issue 4 August 2010
Corruption clean-up
I agree that name lending has got something to do with the defaults.
But that problem is not specific to the region. Name lending is a
proxy to the West’s overdependence on rating agencies to the extent
SPORTING of ignoring due diligence – a must in every business deal.
CHANCE
From F1 to Olympic
Such lack of basic corporate best practice paved the way for
dreams, how Gulf states
are positioning
corrupt executives to finish off their evil agenda easily.
themselves as
world players White-collar corruption cases have definitely increased in the GCC
but the rate does not compare to what we see in other oil-producing
states. I remember Archbishop Desmond Tutu, in his speech in Dubai
last year, expressing dismay about Africa’s governments equally oil-
rich region but poverty and war stricken at the same time.
COMING CLEAN
Anti-corruption
drive continues
CAT OUT THE BAG
Jaguar boss outlines
Middle East plans
The corruption clean-up in the GCC as well as the ‘name and
TRADING UP
Bahrain’s new exchange
SINGAPORE SWING
Secrets behind a stunning
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
shame’ policy should be applauded. But I just have one concern –
UAE.................. DHS 10
aims to be No 1 success story WWWGULFBUSINESSCOM

the policy needs to be universal and not selective. If we can name a

GB Regional AUGUST White.indd 1 7/27/10 10:00:53 AM

former financial governor as a thief, why can’t we do the same for all
the directors and for all the accomplices?
A lot of corrupt executives remain. Officials should not stop their
efforts in clamping down on these people. Insider trading seems to
be a taboo subject in this region but I think more needs to be done to
stop this white-collar crime. Unfortunately, the market is still filled
with market manipulators.
Joy Illustre, Dubai

Battle of the bourses grass was used to cover up the whole As we savour our à la carte grilled
I just hope Bahrain’s cross- stadium. That’s ridiculous! And the hammour, may we remember that this
border multi-asset bourse ends golf courses everywhere – they had luxurious meal was made possible by
up successful. The region is to import tonnes of greeneries. That our dear brothers, the fishermen.
already swamped with bourses means lots of carbon and a lot of Ravi Kumar, Bahrain
and banks hence what we need is waste, as you have to water them
a consolidation and not another constantly to survive. More evidence
entrant in the market. of unsustainable hype.
What has happened to Qatar’s Riza Lee, Qatar Email: Write to the editor,
International Mercantile Exchange Gulf Business, alicia@motivate.ae
or Imex? We have not heard anything Deep water and the letter of the month wins
about them since 2008. The bourse What I don’t understand is why an Alessi watch.
would have been the second energy fishermen have to undergo so much
exchange in the Middle East since the trouble just to make a living.
launch of the UAE’s Dubai Mercantile Thanks for writing about these
Exchange. Frankly, I’m really sceptical. people, poor creatures, who are now
Robert George, Abu Dhabi forced to risk their lives just to meet
their quotas.
Sports without boundaries This would have not happened
The GCC may have lots of money to should they have been accorded
create a new sports haven but they proper legal protection.
don’t have enough water to sustain My friends and I spoke to some
it. Who will forget what Doha looked fishermen in Abu Dhabi, and they
like during the Asian Games in 2006? said they work long hours with a
Thousands of yards of fake Bermuda very low salary.

26 gulfbusiness September 2010

BRIEFING DEBT

Chequeing in
Thousands are jailed as they fall into arrears. But is
prison really the best solution, asks MICHAEL GORDON.

T
he number of expatriates
incarcerated for debt is on the
rise. Research by RAK Bank
last year indicated that up to
2,500 UAE residents were skipping the
country each month without settling
their debts.
The epidemic could worsen
further as authorities introduce new
regulations, where defaulting debtors
could face legal action by banks in the
UAE within 90 days.
Only last month, the UAE HSBC
boss, Abdulfattah Sharaf, caused a
furore when he claimed ‘jail works’
for recouping debt, which many argue
is ironic because it is the prison-fear Radha Stirling, founder, Detained in Dubai.
factor itself that drives most debtors
to flee the country before they’ve paid “Unfortunately, a number of banks
their dues – leaving banks with vast are lodging complaints with the police
swathes of non-performing loans. to prevent debtors leaving the UAE.
Nevertheless, Sharaf says that the These banks are sometimes presenting
very threat of jail pushes debtees to security cheques that are held when
seek financial assistance from family a customer takes out a loan. In the
and friends in a bid to bail them out. event of a default, the banks present
Radha Stirling, founder of the these knowing that this will result
London-based charity Detained in in a prison sentence. The banks hope
Dubai, said that the UAE should instead that the threat of jail will encourage

“Many of our clients also have little

HSBC argued that jail works because faith in the legal system and the ability
the threat of prison pushes debtors to to receive a fair trial if, for example, a
security cheque was presented.”
seek financial assistance. Sterling adds that, in her
experience, the debt is not eradicated
decriminalise bad debt and force the debtor to exhaust all resources to after jail, although it is usually
lenders to carry out proper credit checks discharge the debt and avoid prison.” not pursued. “Most people who
when giving out loans. She added that if Sterling argued that many debtors contact us serve a sentence based
the threat of jail were removed it would would prefer to stay in Dubai and on bounced cheques rather than the
force lenders to be more responsible seek employment to repay their loans, debt itself, so when they leave prison
when giving out credit. but when banks act so swiftly and the debt exists. Others have been told
Sterling added: “I have not a criminalise debtors the individuals they will not be able to leave prison
single client who feels that the debt are not willing to risk their freedom. until their debts are paid. It is a grey
collection methods in the UAE are “If the lenders stopped criminalising area and we are seeing conflicting
fair. As a result of the downturn in debtors, more customers would be reports,” she says.
economy, a plethora of individuals willing to work with the banks in For those debtors that do persevere
are genuinely unable to repay their Dubai to repay as much as possible. in the UAE and attempt to find work
loans as agreed and desperately need Surely this is more productive for the to allow them to repay their debts,
restructuring and payment plans. banks,” she adds. the authorities recently announced

28 gulfbusiness September 2010


another change in legislation. Those According to an Interior Ministry
expatriates that have defaulted on bank official, the residency departments
loans or have other financial issues will not renew the residence visas
will no longer be able to renew their of expatriates if they are wanted
residence visas. by police for financial obligations.
Residency visas of expatriates,
their relatives and their employees
Loan defaults per will be renewed only after the
population settlement of the financial disputes.
According to the report, police have
instructed residency departments to
19.7 per cent UAE nationals arrest these expatriates or send them
to the authorities.
Sterling adds: “Where is the
incentive for debtors to stay and face
22.1 per cent expatriates the music, they are compounded at
every turn. They can’t work without
a passport or their visa and so they
0 5 10 15 20 25 have no means of repaying the debt.
Source: Datamonitor The only option is jail or run.”
“JAIL WORKS”
Words from an
ex-Dubai inmate
W hen Thomas Smith* landed
in Dubai he availed of the
numerous credit facilities presented
to him. He argues this was the only
option as housing rent had to be
paid a year in advance.
All was well until he lost his job.
As an advertising salesman he was
unable to meet his work targets and
was let go; so his loan payments to
the National Bank of Dubai slipped,
the bank presented his security
cheque, and he was arrested.
Upon capture, he was
incarcerated in a holding cell in
the city centre, were he would wait
until his trial. Went it came to his
hearing, Dave was surprised at how
fast the proceedings advanced and
how little interaction was allowed.
“There were no mitigating
circumstances taken into
account. You are simply asked
to confirm it is your signature on
the cheque, and that is it, you are
automatically guilty.”
Some of the ordeals he
witnessed in jail will scar him for
life. Yet, despite the ordeal, Thomas
believes that jail works.
“Yes I lost four months of my life,
and the experience was horrific,
but once I was released the debt
was clear. If the system was
switched from a criminal case to a
civil case I would be locked in the
country until I cleared the debt,
which could be indefinite.
“I was lucky. I served my sentence
and immediately got out of the
country upon my release. If the
banks were negotiable people would
stay and work it out with them, but
with the job market suffering and the
banks foreclosing on debt many, like
myself, have no choice.”
*Names have been changed to
protect identity
September 2010 gulfbusiness 29
BRIEFING BANKING

Tapping Arab wealth

The $2.3bn Qatar Harrods deal spurred private wealth firms to beef up Gulf resources
and court demand from the super-rich. RYAN HARRISON reports.

A
t the start of 2010 the once
thriving wealth management
industry in the Gulf had
virtually run out of puff,
exhausted by the global recession.
The two-year slump after the
downturn had transformed the
region’s uber rich from ambitious
investors to cautious bystanders.
But in May, the Qatar royal family
sealed a landmark deal, buying
London department store Harrods
for $2.3 billion and offering some
hope that services for wealthy local
families, the high net worth and
royalty were picking up.
Smelling blood in the water, banks and
asset managers have spent the summer
months redoubling their efforts in the
region; the likes of Barclays Wealth,
HSBC, Standard Chartered and Credit
Suisse are among the international
players committing to more manpower
in anticipation of this resurgence.
Craig Stoehr, a corporate lawyer in
the Doha office of Latham & Watkins,
the law firm that represented Qatar
Holdings in the Harrods deal, said
banks are right to have high hopes
that the market comeback is real.
Growing private wealth teams makes sense
given the vast amount of money in the region
and the importance of personal relationships.
“We have certainly seen a trend of
more activity in the private wealth
management area in Qatar and
elsewhere in the Gulf region, as well
as in the area of investment funds.
“Although historically these
relationships have been managed
out of Europe, the importance of
client proximity, particularly in the
Gulf region, appears to be resulting
in the global financial institutions
putting more resources to work on the
ground,” said Stoehr.
Left: Qatari PM Hamad bin Jassim bin Jaber Al Thani. Right: Harrods, London.
He added: “I would expect that
this trend will continue, as it’s a
long-term play and some measured
investment by global financial
institutions in the private wealth
management area would appear to
make sense given the vast amount
of wealth in the region and the
importance of personal relationships.”
Generally there is a big movement
of staff over the summer, despite the
combination of the hot weather and
Ramadan proving a natural slow time
for business. Recruiters say bankers
often time their contracts to align with
school years, while a lot of jobs in Gulf
financial services are two-year contracts
or rolling annual contracts rather than
“permanent” in the UK definition.
Fawaz Baba, a general manager at
Barclays Wealth in Dubai, said the
bank is in recruitment mode across
the Gulf and globally plans to double
the number of client facing private
bankers over the next five years.
“Our client base spans a spectrum
of ultra high net worth individuals
ranging from entrepreneurs and
millionaires to UHNW billionaires and
family offices,” he said. “The Gulf region
is expected to grow over the coming
years. With that in mind, we expect
our business to significantly grow.”
Meanwhile, Standard Chartered
believes the UAE is still a safe bet after
unveiling plans recently to hire as many
as 10 relationship managers in the
country by 2011, taking its total to 35.
The bank’s net profit for the first
half of the year rose 11 per cent
to $2.15 billion and income from
the UAE grew six per cent, “helped
by a stronger wealth management
performance”, it said in a statement.
Many Western investment banks have
developed dedicated teams of experts
that specifically cater for the distinct
client base, including the big sovereign
hitters like Abu Dhabi’s Mubadala.
Banks that plan to increase their
numbers in the Gulf will be quietly
hoping that the long-awaited wealth
management recovery is not a false
alarm and that they can finally put
the dark days of the recession behind
them and get back to the job of making
the rich richer.

30 gulfbusiness September 2010

BRIEFING
BRIEFINGENERGY
ENERGY
Power
Powerstruggle
struggle
As the GCC embarks on mass power privatisation
programmes, the issue of subsidies remains the elephant
in the room. KAREN REMO-LISTANA investigates.
D
ubai’s recent decision to
open up its power sector
to the private sector is
an indicator that the
government is gradually adapting its
policies in response to the changing
economic landscape.
After the long wait on the deferred
Dh20 billion Hassyan power and
desalination plant, Dubai Electricity
and Water Authority (Dewa) this
year finally resolved to privatise the
generation part of the project.
It has mandated HSBC as financial
adviser for its first independent
water and power project, or IWPP,
in a consortium with Clifford
Chance as legal consultant and Mott
MacDonald as technical consultant.
With banks still conservatively
lending and interest rates in capital
markets relatively high, pundits
welcomed the news. After all, the
emirate appears to be the only one
who’s been left out of the Gulf’s
privatisation drive.
In 1996, the Manah project in
Oman became the first experiment of
privatisation in the electricity sector
in the region. Because the idea was
nascent, the International Finance
Corp – the World Bank’s lending
arm to the private sector – funded
the project. Since then, all other
GCC states – except Kuwait – have
followed suit.
“Oman is now a successful model
for Independent Private Partnerships
(IPP). Our role there was to be
catalytic, in a way leading and then
letting other banks follow,” says Adil
Marghub, manager of infrastructure
and energy, Mena, IFC.
“Not only are we working with
the private sector to make a profit,
we are also looking at economic
development. We want to be the
first in doing a certain project and
creating a market for that project.”
The domino effect is largely due
32 gulfbusiness September 2010
to the Gulf’s unquenchable thirst for
energy. Industry estimates show that
the GCC’s countrie’s current demand
for electrical power is about 70 GW
and this is expected to triple over the
next 25 years.
GCC countries have thus begun
to reform their power sectors
in order to allow competition at
the generation level through the
introduction of independent
power providers.
In Saudi Arabia, the government
has permitted the private sector to
invest in power generation.
It also has developed a reform
plan for a three-stage electricity
market evolution over the period
2008 to 2016.
Unbundling and generation
competition started in 2008 while the
A true privatisation is
about lifting the subsidies.
What is happening here is
not privatisation in its
truest sense.
Khalid Al Awadi, gas operations
manager at Emarat.
wholesale competition is set
to run to 2013, and thereafter
retail competition will run from
2013 to 2016.
Bahrain, on the other hand, is
shifting from a vertically integrated
model to a single-buyer model,
thereby allowing private sector
participation in generation.,In the
UAE, specifically in Abu Dhabi, more
than four-fifths of the production
of electricity and water has been
sold to IWPPs.
Oman has taken a further step
by establishing an independent
regulator and plans to privatise the
transmission and distribution
side of the sector as well.
Qatar, meanwhile, has initiated
a programme for the reform and
privatisation of the electricity sector
by granting licenses to private sector
entities to build generation plants.
Various estimates suggest different
investment figures, but they all point
in one direction – that privatisation
is here to stay. But what does it really
do? Should residential or industrial
consumers be concerned at all?
“A true privatisation is about
lifting the subsidies out,” says
Khalid Al Awadi, gas operations
manager at Emarat. “But since it
is not happening here, the kind
of privatisation we have will
only remove the daily headaches
of the government, but it is not
privatisation in its truest sense.”
The way IWPPs or IPPs work in
this region is by selling water and
electricity from their production
plant to the single buyer of the sector
– usually a government-owned entity
under long-term power and water
purchase agreements.
Under this set-up, the purchase
price is guaranteed by the
government related entity, who also
sources out the fuel.
Al Awadi surmises that fuel –

gas, oil or coal comprises 96 per
cent of the total cost of generating
and transmitting electricity per
kilowatt hour. The other four per
cent is comprised of generation and
transportation cost.
“If the power is still sold at
subsidised prices, then you only
improve efficiency on the four per
cent of the equation,” he said.
“Privatisation works well if you
have access to a cheap source, but
there’s not really much here,” a
station manager at Sharjah Water
Electricity and Authority said. “You
see, utility businesses in UAE are
not really profitable because of the
limited supply. Privatisation doesn’t
make any difference.”
In Sharjah, where both gas and
oil are scarce, subsidies by the
government can reach more than
50 per cent.
Abu Dhabi and Dubai is a different
story because their utility business
remains profitable.
Al Awadi estimates that, on
average, it costs Dewa and Adwea
(the Abu Dhabi Water and Electricity
Authority) 15 fils to generate and
transport one kilowatt per hour of
electricity, leaving them a decent
profit margin (tariff starts at 20fills
per KwH).
“Privatisation has done wonderful
work in Abu Dhabi,” says Saeed
Nassouri, Chairman’s office technical
advisor at Adwea. He said profit
would also be increased in lieu of
the rise in efficiency and foreign
investments.
Al Awadi agrees. “What
privatisation did in Abu Dhabi was to
improve the efficiency by maximising
the power output. But the price is
BRIEFING ENERGY
over the unsustainability of current
subsidy regimes.
IEA chief economist, Fatih Birol,
says lower subsidies would depress
local demand growth, which would
Photo courtesy of DEWA
make more oil available for export,
which in turn means more revenues.
Phasing out subsidies in 2011 to
2020, as agreed last year by the G20,
would cut primary global energy
demand by 5.8 per cent by 2020 and
shave 6.5 million barrels per day
off 2020 global oil demand, the IEA
still the same for the public.” predicts.
And this is the problem that Abandoning subsidies would
international agencies have homed reduce global of GCC by 6.9 per cent
in on. Although there is a by 2020 – or 2.4 gigatons of CO2. This
privatisation scheme in principle, is equivalent to the current emissions
the end aim of scrapping subsidies is of France, Germany, Italy, Spain and
still not achieved. the UK combined, the IEA said.
Subsidies may be beneficial The region’s subsidised system is
to the consumers but they are also to be blamed for the slow uptake
destructive in the long-run, spurring in investment in clean energy.
unsustainable growth, harming the To boost the share of new energy
environment and generally creating generation, Dr Nasser Saidi, chief
an unequal playing field with the economist at Dubai International
global business community. Financial Centre (DIFC) suggests that
The GCC’s power demand, for governments consider introducing
Governments must
phase out subsidies for
petroleum-based energy
and increase renewable
energy incentives.
Dr Nasser Saidi, Chief Economist DIFC.
example, continued to grow by five to taxes on traditional sources.
seven per cent during the recession “Governments will need to provide
whereas growth should only be at incentives for increased consumption
2.5 to three per cent, in line with its and production of renewable energy,
economic and population growth. as well as phase out subsidies for
According to the International petroleum-based energy production,”
Energy Agency (IEA), global spending Saidi said.
on energy subsidies rocketed by According to the World Bank,
63 per cent to $557 billion in 2008 subsidies not only hurt government
from the year before, with oil and budgets, they are also ineffective.
gas producers Iran and Saudi Arabia “Energy subsidy is a political
occupying first and third spots choice,” Alex Kremer, senior
respectively among the world’s economist at the World Bank, said.
topenergy subsidisers. “But the government needs to find
The IEA’s report, presented to alternative measures to address
the G20 summit in Toronto in June, energy efficiency in the absence of a
mirrors growing alarm in the region proper market pricing mechanism.” ■
September 2010 gulfbusiness 33
BRIEFING OFFICE LIFE
Information overload
It takes 20 minutes to start concentrating, but workers get interrupted every three minutes.
Time and data management is more crucial than ever, says RYAN HARRISON.
I
n November 2007, author Malcolm
Gladwell told business leaders at
a Dubai conference that too much
information costs lives.
He was describing the emergency
room at a hospital in Chicago which
changed the way it diagnosed heart
attacks. The facility encouraged
doctors to focus on a few vital facts
about those suffering from chest pain.
Consequently, Cook County became
one of the best places in the US at
diagnosing chest pain.
In recent years, experts have agreed
that the hunt for more information is
far less important than was previously
thought. But the race for growth in the
Gulf has led to a sharp rise in data from
international and local sources, leaving
workers facing an information overload.
Document management firm Xerox
says that more than a quarter of an
average work day is made up of non-
urgent or non-important interruptions
and recovery time, 20 per cent in
meetings – either in person, by phone,
video conferences or online – and just
12 per cent on thought and reflection.
What’s more, a lack of management
training to cope with the demands of
My recommendation is switch off the
update alerts. That’s one interruption
that you really can control.
working in the Gulf can leave company
directors high and dry.
In fact, staff that are hit with the
latest management theories with
no context for the region will find it
difficult to apply their newly acquired
information, according to Hazel
Jackson, CEO of executive training
consultant Bizability in Dubai.
“Organisations typically invest in
training to develop or retool their staff;
empowering them with knowledge so
they can perform better in their roles.
34 gulfbusiness September 2010
Hazel Jackson, CEO, Bizability, Dubai.
The liberalisation of the Gulf countries
has introduced international e business
practices and transformed academia.
But the rate at which the Gulf is
morphing into an information economy,
against a backdrop of more conservative
social customs, is quite unique to this
region and that tends to influence
information policy at both a government
and corporate level,” said Jackson.
She added that often in the training
environment, participants who are
learning in their second or third
language struggle to absorb the new
information unless the teaching and
learning styles are adapted.
Information overload is not just
about the growing mountain of
information. It is also about the
growing diversity of information. The
old information types never seem to
go away – paper forms, documents,
emails, faxes and phone messages.
Meanwhile, new forms have sprouted,
from text and instant messages
to blogs, wikis, social networks,
podcasts, digital images and sounds,
and even digital “stickies.”
Bizability research found that in
general it takes 20 minutes to really
start concentrating on a topic and we
are interrupted every three to four
minutes with incoming emails. When
this is added to the various social
media channels that staff keep open on
their computer screens, productivity
can be seriously compromised.
Jackson adds: “My recommendation
is switch off the update alerts! That’s
one interruption you can control.
Then you need to introduce some
discipline and workplace routines. For
example, you may make social media
management part of an employee’s role
– just be very clear on the outcomes
they need to achieve for the business.”
As business leaders across the
region face up to their biggest threat
to productivity, experts insist that
the test now is to simplify, prioritise
and communicate more effectively
throughout their organisation.
If the recent recession reminds
businesses of anything, it’s that
deciphering the good information
from the bad, or the secure investment
from the rotten one, are decisions they
can’t afford to get wrong.
Dazed and confused: office tips
to stem the data flood
1. Digitise information and eliminate paper
2. Be better organised – such as filing
better, for either paper or digital
information
3. Reduce copying or unnecessary
conversions – including paper or
digital copying or sending emails
to unnecessary recipients
4. Central repository – keep information
in one place (paper or digital)
and making it more accessible.
5. Technology upgrades, more staff,
better training
Better thinking. Together.

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COVER STORY
Defying
gravity
With the ash cloud, SARS and 9/11, James Hogan has flown
through more aviation challenges than most. The Etihad boss tells
ALICIA BULLER why breaking even may be his biggest test yet.
J
ames Hogan runs the
fastest growing airline
in the world. And it
shows. It’s a little
past 11 am and he’s
already dealt with an
impromptu office
‘drop-in’ from the
Fijian Prime Minister. “Apologies,” he
says, “it’s been a busy day.”
In the same breath, the CEO says
that he’s hosting a delegation from top
aviation body IATA. He delivers all this
with the cool head you’d expect from
a man that, today – like every day –
oversees 150 flights to 63 destinations
from the Abu Dhabi International
Airport hub.
Is he stressed? “No,“ he says.
With his no-nonsense Australian
twang and measured delivery, you’re
inclined to believe him. That, and
the fact that Hogan, like a very small
handful of his Gulf aviation peers,
has something to smile about.
38 gulfbusiness September 2010
Perched in his looming, capacious
office, there’s little sign of the
recession here. Beyond his desk, floor-
to-ceiling window frames capture
shiny new Etihad planes lurching one
after another into the sky outside.
And despite a tough year in 2009 –
“wasn’t it for everyone,” he qualifies
– the capital emirate’s national
carrier delivered its best half year
performance to date in 2010.
Etihad transported 3.3 million
passengers in the six months to June,
an increase of 11 per cent on the
first half of last year. And more good
news lies in the fact that the global
recession appears to be paling for the
world’s airlines with IATA’s forecast
that carriers will report profits of $2.5
billion in 2010. This is after recording
losses of $9.9 billion the previous year
and $16 billion in 2008.
The Middle East rode the downturn
better than most and was one of the
few areas of the world to display
consistent growth. During the
second half of 2009, as the global
industry saw a 3.5 per cent fall off
in passengers, the region’s carriers
logged an 11.2 per cent increase.
And since its start-up in 2003,
Etihad has grown to a fleet of 53
aircraft and has plans to operate
four times that in the next five
years. This expansion is born of the
largest aircraft deal in history, with
orders for 55 Airbus and 45 Boeing
airliners, as well as options on a
further 105 aircraft, announced at the
Farnborough Air Show in 2008.
GROWING PAINS
But despite successfully launching
eight new routes during the recession
and expanding the airline’s overall
capacity by 18 per cent, Hogan
admits it’s been a painful time after
a succession of aviation crises,
from the economic slowdown to the
Icelandic ash cloud.
 COVER STORY

If we had the
same year in 2009
that we had in
2008 we would’ve
broken even.
“What was significant was the
global financial crisis which pushed
our break even out to the end of 2011,”
Hogan explains. “If we had the same
year in 2009 that we had in 2008, we
would’ve broken even by now.”
Then again, the aviation veteran
has been helmsman at the UK’s BMI
airline and Bahrain’s Gulf Air in his
time, so he knows more than most
about cyclical crises.
“It’s the cycle of aviation. If you go
back over the last 20 years, whether it’s
SARS, 9/11 or fuel prices, what you do
see is an aviation rebound,” he says.
“2009 was tough; it was tough for
all airlines. We bought a lot of aircraft
which put more pressure on us and
we introduced improved frequencies,
new destinations. As we moved into
2010, we were doing well, we achieved
our first quarter aims, but then we
had the ash cloud.”
Hogan admits that the singular
effect of the ash crisis cost Etihad
”$50 million,” a sum that, combined
with the global turndown, put the
brakes on breaking even this year.
“The fuel crisis and 9/11 were
unprecedented, just as the ash cloud
crisis was unprecedented when
European airspace closed overnight.”
By now, Hogan knows what to do in
a crisis: manage it, get through it and
even make the most of it.
“It was a stressful time for our
customers. But managing crises is
what airline management does best;
we run an airline, this is what we
do – we look after customers. What
was important to me is that our
recovery was in place because, at
some stage, you do recover. We took
the decision to bring customers into
Abu Dhabi and house them there,
because at the same time you had

September 2010gulfbusiness 39
i
COVER STORY

Etihad aircraft on order

Unit Aircraft Year
6 Airbus A330 End of 2011
20 Airbus A320 Between 2011 and 2015
10 Airbus A380 From 2014
25 Airbus A350 Between 2017 and 2020
35 Boeing 787 Between 2014 and 2020
10 Boeing 777 Between 2011 and 2013

We didn’t have the same level of seat

penetration last year, what’s important to
me is that we get people travelling again.
the problems in Bangkok. We made people start travelling, that we get
sure that we accommodated and we the business travellers.
communicated,” the CEO says. “What’s vital now is that our first
“We had people in the hotels 24/7 class and business class and economy
and within 36 hours of Europe are full, and we are getting the right
being open again we cleared the level of pricing. Across all airlines in
backlog. We even had a busload of 2009, we saw levels of discounting
40 Irish people saying they didn’t that we hadn’t seen before. We need
want to go home, they were having to get the pricing right to ensure we
a nice time. I am very focused on meet our financial targets. “
the journey of my customer.” Hogan has also previously said
that it takes three years to break
even on each route. Bearing in mind
the relative youth of the latest eight
destinations, brand awareness will
be a major priority in the goal to go
into profit in 2011.
“We’ve achieved so much;
we’re only six years old, so we’re
continuing to mature as a brand.
We’re continuing to invest, a lot of
destinations have only been there one

SEGMENTATION Etihad launches no-frills flights

But Hogan says the biggest issue in
2009, the worst year in history for Etihad will introduce its first ‘all
economy’ class aircraft into its fleet in
aviation, was a decline in premium
October 2010. The two Airbus A320s
traffic and the consequent impact will be configured to carry 162 economy
on yield. “We didn’t have the same class passengers, an increase of 42
level of seat penetration as we had from the current economy capacity.
in 2008. And the second thing was The all economy cabin aircraft will
the pandemic: it meant that the operate to short haul destinations
Middle East market was impacted, which have high demand for economy
our highest yielding market because traffic. Initially these will be Alexandria,
people travel to Europe, Australia Calicut, Colombo, Damascus, Doha and
and the United States,” he says. Thiruvananthapuram.
“What’s important to me is that

40 gulfbusiness September 2010


or two years so we’re still maturing in
those markets,” Hogan explains.
The CEO makes no secret of the
fact he is relying on the Gulf’s
power as a ‘hub’ to lure in traffic –
singularly, one of the most powerful
factors behind the continued upspike
in UAE airports.
“People can come direct instead of
going to a European hub and making
stops, that’s why you’re seeing a
change,” he says.
“The product’s good, the timing
is competitive, the airport
infrastructure is good, and it’s
time. We just need to focus on
the segmentation.”
CAPITAL GAINS
Hogan thinks on only one scale:
supersized. Naturally, he is mindful
of the continued growth of Abu
Dhabi and the positive osmosis this
affords the national carrier. Etihad,
the world’s fast growing airline, is
matched only by the growth of the
airport it calls home.
The increase in traffic through
Abu Dhabi International Airport in
the first half of 2010 was 11.7 per
cent on last year, while cargo loads
increased by 20.3 per cent and aircraft
movements by 11.9 per cent. The
newest terminal, Terminal 3, opened
in January 2009, enabling the airport
to handle, approximately, 12 million
passengers per annum. It is expected
that passenger numbers will reach this
level in 2011.
Development work has also
started on a new passenger terminal,
to be situated between the two
runways and known as the Midfield
Terminal. Upon completion in 2012,
the Midfield Terminal will take the
airport’s passenger capacity to more
than 20 million per year. It’s these
vertiginous numbers that feed Hogan
with the chutzpah to say he’ll break
even in 2011.
As the government follows its plan for
Abu Dhabi’s Economic Vision 2030 and
ploughs cash into more roads, housing,
healthcare, education, shipping and
industry – the air traffic payback is
simply a no-brainer for Hogan.
Abu Dhabi Airport traffic increased 11.7 per cent this year.
“If you look at the aspirations
of Abu Dhabi and the 2030 plan,
there’s synergy with us. I think
the Etihad Airways F1 Grand Prix
was outstanding; and if you look
at Abu Dhabi tourism, services and
education, you see that the race
wasn’t just about putting on a show,
it was about raising the bar, creating
an event,” he says – adding that he’s
”delighted” with the sponsorship deal.
“Our hub is Abu Dhabi, so the more
focus on Abu Dhabi the better; it’s
good for the airline; it’s good for the
brand. Yas Island, the golf courses,
Ferrari World – these are just some
of the things that give me the
confidence that Etihad will continue
to grow and will also be able to move
to profitability.
Abu Dhabi International Airport
passenger numbers
6.9 million
2007
9 million
2008
9.7 million
2009
COVER STORY
“Our business is audited every
year and we work closely with the
2030 plan, we look at segmentation
and we look at business and leisure
traffic [in line with the] economy,”
he says.
“Our plan is to be a best-in-class
airline, and it comes back to getting
the segments right.”
Hogan may have quivered and
quaked through every aviation crisis
in the last two decades but with
the pressures of diminishing yield,
competitor discounting and cash-
strapped travellers, the Etihad boss
is facing the arguably more complex
challenge of growing the carrier to
profitability in just 12 more months.
Careering into the black just eight
years after launching is no mean feat;
but then neither is launching an airline
from scratch and becoming the fastest
expanding airline in the world with a
litter of global awards. Only time will
tell whether Hogan can pull off what
will be perhaps his biggest coup yet.
The CEO likes to use the word
‘unprecedented’ but, for the first time
– unlike SARS, 9/11 or the ash cloud
crisis – there’s nothing surprising
about this challenge, because it’s one
all of his own making. ■
September 2010gulfbusiness 41
BUSINESS ABU DHABI

10 reasons
ABU DHABI
is turning heads
Long-term drivers are fuelling the capital emirate and
commanding the world’s attention. ALICIA BULLER reports.

42 gulfbusiness September 2010


P
alm-shaped islands
versus art museums.
Gleaming shopping malls
versus long-term plans.
Bling and bombast
versus conservatism. The
clichés of Dubai and Abu Dhabi are
well-trodden. But what has forced a
greater divergence in the paths of the
emirates, and shaped their identities,
is the recession.
While Dubai nursed its wounds
and maintained an uncharacteristic
hush, Abu Dhabi threw a little of its
legendary caution to the wind and
announced international acquisitions,
high-profile global partnerships,
neighbourly bailouts and billion-
dollar megaprojects.
Home to seven per cent of the
world’s oil supplies and one of the
highest per capita GDPs globally, the
emirate has continued full throttle
with its $500 billion plan to upgrade
infrastructure and industry in line
with the Abu Dhabi Economic
Vision 2030.
But it would be churlish to say the
capital emirate emerged unscathed
from the recession. It didn’t. Like
most global markets, the emirate was
bruised by the real estate downturn,
weakened company profits and tight
bank lending.
The ambitious Economic Vision
targets seven per cent growth
through to 2015. But according to
BUSINESS ABU DHABI
the International Monetary Fund
the reality is somewhat damper,
with 3.7 per cent growth forecast for
2010. Dubai’s economy is expected to
contract by 0.5 per cent this year.
For Abu Dhabi, it is not today that
matters so much, but tomorrow. It
is the combined factors of a proven
ability to deliver and strong net assets
that lend promise to the emirate’s
plan. Where Abu Dhabi
excels is in the fuel of its
long-term drivers.
September
Aaugust 2010gulfbusiness 43
BUSINESS ABU DHABI

CASH
Weighing in at an estimated $600
billion, Abu Dhabi boasts the largest
combined sovereign wealth fund in
the world. And while the government
has borne the combined pressure
of loans to Dubai, weakened oil
prices and ill-fated international
investments, the emirate’s overall
softly-softly approach to spending
has ensured its treasure chest
remains the envy of the world’s
debt-beleaguered nations.
Abu Dhabi posted a growth of six
per cent for non-oil activities in 2009,
signalling that the plans to buffer
the economy are on the right track.
Finance levels are no longer confined
to the fate of crude. Add that to the
fact that oil reserves are valued at
$1 trillion, and the long-term cash
outlook is buoyant.
ENERGY
In 2009, Abu Dhabi’s oil reserves stood
at 92.2 billion barrels, while its total
natural gas reserves were estimated at
212 trillion cubic feet. Electric power
generation grew at 14 per cent on year
to 39, 189 gigawatt hours.
And despite its natural reserves,
Abu Dhabi has unabashedly pumped
billions into alternative energy
projects, including carbon-free city
Masdar. Foreign minister Sheikh
Abdullah has also announced the
country’s nuclear ambitions with
UN backing.
“Abu Dhabi has the capacity to
lead in nuclear energy, this can’t be
ignored. While it might seem ironic,
it’s actually the perfect match,” says
Oliver Cornock, regional editor for
the Oxford Business Group. “It is in
line with the emirate’s continued
optimisation of the hydrocarbons. Abu
Dhabi has a will, it has a way, and a
proven ability to deliver.”
INFRASTRUCTURE
A large portion of the $500 billion
investment in Abu Dhabi’s future is
reserved for infrastructure projects
– housing, roads, rail, ports and
aviation.
“The 2030 strategy demonstrates
an understanding of how you need
to develop an economy,” CEO of Abu
Dhabi Ports Company, Tony Douglas,
told Gulf Business. “For any city to be
competitive on a global level, you have
to have the transport infrastructure
in place, seawater ports, air ports
and heavy rail, as well as roads.
Without any combination of three
out of the four, you will never be
competitive globally.” Douglas, ex-
boss of Heathrow airport in London,
is masterminding Abu Dhabi’s $24
billion Khalifa Port and Industrial
Zone. The first phase
is set to open in Q4
2012 and, when
complete, the
port will have a
capacity of 35
million tonnes.

GOLD TO GO FERRARI WORLD

Abu Dhabi’s Emirates Palace hotel has
unveiled the world’s first permanent gold
vending machine. For the UAE market,
a special 1-ounce bar is being offered
alongside 1, 5, and 10 grams of gold. All
bars are sold according to real-time gold
prices. Naturally, the machine is garnished
with 24-carat gold leaf.
Ferrari World Abu Dhabi is the world’s largest
indoor theme park, set to open on October 28,
2010. Located on Yas Island, the park is set
to feature around 20 state-of-the-art rides,
the star attraction being the world’s fastest
rollercoaster, reaching speeds of up to 240
km/h, emulating the thrilling sensation of
being in a Ferrari F1 car.

44 gulfbusiness September 2010


INDUSTRY
As part of its ambition to diversify its
GDP income away from oil, Abu Dhabi
is pumping billions into its industrial
city projects, from primaries – such
as steel and aluminium – through
to glass and polymers, assembly,
manufacture and high-tech sectors,
such as bio-tech, semi-conductors and
green energies.
ART AND
Heavy industry features heavily in
the 2030 plan, with the majority of
TOURISM
activity centred in the western town
of Ruwais, which houses the Borouge
polyolefin factory, Ruwais Refinary,
the Abu Dhabi Industrial City and the Literature competitions, film festivals
upcoming Abu Dhabi Polymers Park. and classical music concerts pepper
The billion-dollar industrial sector Abu Dhabi’s calendar, fuelled by
is pipped to catalyse the emirate’s the multi-million dollar Abu Dhabi
economy in the coming years, and is Tourism Authority (ADTA) and Abu
pivotal to the diversification scheme. Dhabi Authority for Culture and
Heritage (ADACH). The upcoming
cultural district, Saádiyat Island,
embodies the art and tourism vision
and is set to house new Guggenheim
and Louvre museums, in addition to
29 planned five-star hotels.
“Over the past six months,
occupancy levels have fallen by 18 per
cent, but are still a relatively healthy
64 per cent,” says director-general of
ADTA, Mubarak Al Muhairi.
“We are on track to achieve the 2012
iStockphoto
targets of 2.3 million hotel guests and
24,000 hotel rooms.”
AL GHARBIA
Al Gharbia is the new name for the western
region of Abu Dhabi, which makes up 60
per of the land mass and accounts for
40 per cent of the GDP of the emirate.
The sprawling region is currently being
redeveloped, with an estimated $67 billion
worth of industry and tourism projects in
the offing.
WRDC
BUSINESS ABU DHABI
BANKING
Exorbitant oil prices and low interest
rates propelled the national banking
sector to grow at a compound
annual growth rate of over 32 per
cent between 2003 and 2008. These
heady days were curbed somewhat
by the recession, but the $35 billion
government injection into the system
bore fruit by mid-2009. Liquidity
issues remain, but the drivers of a
growing population, credit-hungry
consumers and an upward trend in
Islamic finance services hold long-
term promise.
“Abu Dhabi has a strong banking
sector and it is now evolving from the
traditional and corporate banking
to fee-driven added-value services,
such as investment banking and asset
management,”
says Phillipe
De Backer,
partner,
global
financial
services,
Bain &
Company.
September 2010gulfbusiness 45
BUSINESS ABU DHABI
EDUCATION
Education is another pillar in the
economic vision and a building
block in stimulating non-oil GDP.
The UAE federal government
allocated $2bn for the sector in 2009
– and a programme of reform that
is harnessing private expertise and
international models.
Under the new education plan,
$1.3bn will also be invested in
research and development by
2018. Both federal and private
universities will be invited to
submit proposals to win grants for
funding. Four key sectors, which are
integral to the emirate’s economic
Getty Images
strategy, have been prioritised:
health, aerospace, semiconductors
and renewable energy.
46 gulfbusiness September 2010
SPORT
The scale of Abu Dhabi’s ambitions
and, more importantly, its ability to
realise them, was evidenced by the
on-time completion of the $40 million
Yas Marina Circuit, which hosted the
inaugural F1 Grand Prix race.
Chief developer Aldar has seen
troubled days since and sold some
of its assets back to the government,
but the triumph of the F1 race
demonstrated the power that sport
has to imbue a nation with success
and recognition.
Abu Dhabi has hosted many world-
class events including cricket, martials
arts, tennis, golf and football. Most
recent is the FIFA Club World Cup. The
emirate has also been busy snapping
up UK Premier League football clubs
(Machester City, pictured right). Sport
is more than just a game for Abu
Dhabi, and is a major tourism and
awareness driver.
HEALTH
A rapidly growing population and
an ongoing push to modernise and
improve medical services mean
investment opportunities in Abu
Dhabi’s healthcare sector are on the
rise. Demand for inpatient services may
require up to 2,000 additional beds
SPACE
This time last year, state-linked arm
Aabar Investments announced its 32
per cent stake in Virgin Galactic, which
aims to start flying
private passengers into space for
$200,000 per ticket. Aabar has since
been delisted and folded back into the
arms of its owner IPIC. But this has
done nothing to quell the emirate’s
appetite for the aerospace industry.
The IPIC deal included $100 million
for the development of a satellite
launcher, as well as building spaceport
facilities in Abu Dhabi, which will be
integrated with a university academy
where students can study courses
related space. Last year, the UAE
underwent a galactic revolution with
the launch of DubaiSat1 – the country’s
first Earth-seeking satellite system. Abu
Dhabi continues to invest heavily in the
aviation branch of the aerospace sector.
within 10 years beyond the current
3,642 beds. According to the Health
Authority-Abu Dhabi, “aggressive
growth” is needed in services related to
diabetes and cancer, while low capacity
in gynaceology and othropaedics
means greater investment is required.
What is clear, from the sheer
demand, is that the government will
require increasing participation from
private companies as it forges ahead
with both modernising its current
health facilities and building capacity
for future generations.
BUSINESS INVESTMENT
IPO
no-show
The UAE has yet to issue an IPO this year and
regional activity remains stilted. KAREN REMO-LISTINA
explores the reality of GCC pipelines.
P
re-crisis, there was
swathes of cash
chasing too few
assets. So it’s no
surprise that in the
boom times, over-
subscription to IPOs
in the GCC was far
higher than in western markets. In the
2007, average over-subscription rate
for GCC IPOs was 78 times, whereas
the global average is five to 10 times.
In addition, the average share
price appreciation post-IPO was a
staggering 446 per cent, according
to data from private equity firm
Gulf Capital.
Today, no matter how bad the
markets seem to be, there is still
an abundance of money looking
for investment havens. The only
difference is that investors are
48 gulfbusiness September 2010
cautious and wary that they may burn
their fingers again.
While there are more than a hundred
announced IPOs in the pipeline,
only eight have actually happened
in the first half of this year and just
a handful are expected to come into
fruition by the end of this year.
“Historically speaking, about 50
per cent of the announced IPOs
were IPO’d,” Shailesh Dash, founder
and CEO, Al Masah Capital told
Gulf Business. But that was then.
Economists say the deep recession,
has brought the world into an
unchartered territory.
The first quarter kicked off on
a positive note with a five-fold
increase in the funds raised. Ernst &
Young says Middle East IPOs raised
$420.5mn from $83.6mn in the same
period last year.
There were oversubscriptions –
Saudi’s $110.2mn Herfy Food
Services IPO was 4.6 times
oversubscribed – but the rate no
longer compares with the likes of
Aldar (448 times) or the then Aabar
Petroleum (800 times).
The general consensus in the
first quarter was there would be a
healthy pipeline throughout the year.
It was around this time – March 30,
in Emirates Towers – when Shuaa
Capital CEO Sameer Al Ansari said
that the first IPO in the UAE would be
announced in the “next few weeks”,
with Shuaa as the lead advisor.
The plan, says sources, was to
execute the Dh1bn IPO in June.
But by May, the depth of the
European debt crisis sent major
stock markets reeling – dampening
Shuaa’s confidence.

That’s not to say that the first
quarter was much better. Saudi travel
agency group Al Tayyar, for example,
halted the initial public offering of
its 24mn shares on offer (valued at
SAR1.2mn) in February after a book-
building process failed to attract
enough demand.
“People are worried about
demand,” says Dash. “Nobody wants
Saudi’s $110.2mn Herfy Food
Services IPO was 4.6 times
oversubscribed – but this rate no
longer compares with the likes
of Aldar (448 times) or Aabar
Petroleum (800 times).
to sell their companies at a discount
so appetite in terms of pricing
and retail demand is in question,
especially in the UAE today.”
Despite huge market correction,
some share prices continue to
depreciate due to the lack of liquidity
and the high cost of leverage.
Investors’ other means of securing
funds from banks such as overdraft
Dubai Financial Market.
facilities or advances through
property or other investments are
also restricted.
So although the first quarter
sprinkled some sweet indicators, the
total January to June figures showed
a 31.4 per cent decline from $1.2bn to
$830mn this year
Of the eight issues in the first
half, seven were from KSA. Saudi’s
Knowledge Economic City Company
raised $272million or 32.7 per cent
of the total capital raised in the GCC,
data from PricewaterhouseCoopers
(PwC) showed.
The only non-Saudi IPO of 2010 was
in Qatar, for the Mazaya Qatar Real
Estate Development Company, which
raised $144 million in Q1.
The GCC IPO activity may return
at the end of the year or in 2011 but
this outlook still depends on some
September 2010gulfbusiness 49
BUSINESS INVESTMENT
Shailesh Dash, founder and CEO, Al
Masah Capital.
improvement in valuation, says Steve
Drake, PwC Head of Capital Markets.
“The first half has been very volatile
in terms of valuation therefore it
really has not been the right time to
go to market,” he said, noting that a
significant number of existing GCC
issuers posting poor results and
People are worried about
demand. Nobody wants to sell
their companies at a discount, so
appetite is weakened.
investors sitting on their cash steady
contributed to the fall of GCC markets
since March.
The appetite to go public is
certainly there. It is just the right
timing, if not the magic moment,
they are waiting for, key industry
players confirm.
Emirates NBD Capital is advising
on three companies that plan to list
on the UAE stock exchanges towards
the end of this year. “The IPO will
possibly happen at the end of the year
or early 2011. It could be both in DFM
and ADFM,” Suresh Kumar, CEO of
Emirates NBD, said.
50 gulfbusiness September 2010
Steve Drake, Head of capital
markets, PwC.
DIFC-based Alpen Capital says
they are also in active talks with
three family groups who intend
to go for an IPO over the next few
months. “They plan to list here in
the region. We’re talking to people in
Qatar, Oman and UAE,” Rohit Walia,
executive vice chairman & CEO of
Bank Sarasin-Alpen (ME) and Alpen
Capital, said.
Many regional and international
family offices in DIFC are already
in the pre-IPO stage and are upbeat
of going public soon, according to
the Wealth Management office of
DIFC Authority.
Driven by the desire to increase
visibility, boost transparency and
establish the frameworks needed to
conduct acquisitions, Gulf companies
in fact planning to list on London’s
Plus stock borses, Plus Group CEO
Simon Brickles said.
“What we have found from the
work that we have done with some of
our clients is that they recognise the
volatility will have an impact on the
pricing,” says Drake. “But they also
recognise that there is an appetite
from investors so it is good to
prepare now so that when the market
turns around they are in the position
to go public.”
As the market rebounds, Saudi
Arabia is likely to be the first to
benefit. Saudi Arabia has the highest
number of announced IPOs from
the 2010 pipeline (47 out of the total
106 announced issues in the region).
Planned IPOs range from various
sectors such as telecommunications,
construction and real estate.
The UAE follows with 25 IPOs, mostly
from the real estate sector, whereas
Bahrain and Kuwait announced six and
five IPOs, respectively.
“Saudi has a different story from
the UAE because confidence is much
higher there,” Dash said. “For the past
three years the IPO pipeline in Saudi
has been very big compared to other
GCC states because the economy is
at least three or four times the size of
other economies.”
“If you look at Kuwait which has
300 to 400 companies listed and Saudi
having only 130-140 companies listed
then definitely that is something that
has to change and people should look
at more listings there,” he added.
In terms of sectors, finance has
dominated the IPO market in the
MENA region since 2006. But as the
region pursues its diversification
plans, this will be mirrored in the
capital markets.
“Exchanges have been heavy in
the financial, retail and construction
sectors. While we will continue to see
those industries in the market we’ll
also see more diversification coming
around the leisure, retail, telecoms
and general manufacturing sectors,”
Drake of PwC, said.
The long-term IPO drivers have
not disappeared amid the global
economic slowdown and appetite is
returning along with general regional
confidence. But whether the UAE
will be host to an IPO at all this year
remains to be seen. ■
BUSINESS EDUCATION

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52 gulfbusiness September 2010

G
ulf professionals are flocking like never
before to the MBA, the cornerstone of
advanced education, in a bid to blast
away the recession blues and give their
careers a leg-up.
The world’s top universities that
for years have established outposts
in the region are reporting that
applications have hit an all-time high.
Proving most popular is the part-time study option (or
the executive MBA), which targets students holding down a
day job. The programme is especially attractive as typically
people are nervous about stepping out of a career and a
guaranteed job in the midst of a recession.
Completing a tough course at a top quality institution can
not only boost your business acumen but send your salary
demands sky-rocketing, experts say.
According to the Financial Times Global MBA Rankings
2010, the London Business School MBA – judged the best
currently in the world – increased students’ salaries on
average by 124 per cent over their careers.
Gulf workers will be hoping to emulate this success
by signing up to one of the rising number of world-class
schools, although calculating the salary benefits can often
be a tricky business, said Peter Greaves, head of financial
markets at headhunter McArthur Murray.
“Middle East employers like education but there are so
many other factors that still go into hiring people, like
nationality and family. So it’s impossible to put a price tag
on the MBA certificate.
“It forms a lesser part of the overall decision-making
process compared to other markets around the world. Plus,
if you’re from Asia, companies hiring in the Gulf would
expect a certain level of education, which they wouldn’t
necessarily demand from locally-sourced candidates.”
In these lean times companies trust the MBA quality
kitemark to hire staff to inject new thinking into their
organisation as firms navigates out of troubled waters.
Recruitment across all sectors, especially financial
services, has slumped since the recession took hold, as
employers lock down their budgets for new workers.
Instead they’ve opted in some cases to train up the
existing workforce or offer the MBA as a retention tool.
Janet Johnstone, managing director and senior executive
September 2010gulfbusiness 53
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Randa Bessiso, director Manchester
Business School, Dubai branch.
officer of the Dubai Branch at Bank
of New York Mellon, said: “Where
we wanted to retain employees we
offered to pay for their education or at
least towards it.
“We’re saying it’s our investment in
you, if we can’t afford to match your
changing salaries requirements. There
Demand for specific courses
within the MBAs has changed in
line with the Gulf’s financial
fortunes and cultural advances.
are handcuffs on the education though
in that they have to stay with the
company for two years after the MBA
is completed.”
Johnstone said the downside to
executive MBAs is that during the time
staff are studying there is a degree
of distraction from the day jobs. “We
like to say it’s employee minus 20 per
cent,” she said.
“That’s in the short term, but once
they’ve completed the MBA the benefit
to the firm is huge as it gives them
a much fuller, sharper view of the
world. They begin to challenge senior
management and generally have the
Rahul Dhadphale, regional director,
London Business School, Middle East.
ability to connect the dots better in
transactions.”
Meanwhile, demand for specific
courses within the MBAs has changed
in line with the Gulf’s financial fortunes
and cultural advances. For instance,
Manchester Business School, which set
up in Dubai in 2005, has seen the global
MBA course pick up in popularity while
the construction stream has witnessed
enrolment drop from 20 per cent to five
per cent in the last two years.
Randa Bessiso, the director
at Manchester Business School
Worldwide’s regional centre in Dubai,
said she has also noticed the number
of women at the university has
increased to 16 per cent from 11 per
cent in the last year. “We have been
very active in the market to attract
women and there is very strong
interest for them to pursue MBAs. I’d
expect this number to hit 20 per cent
or above by next year.”
BUSINESS EDUCATION
Manchester Business School Dubai’s
yearly intake is on average between
110 and 120 students. Half come from
the UAE and the rest from the GCC.
The number of self-funded students
has grown from 82 per cent to 88 per
cent in the last semester, as corporate
sponsorship has tailed off.
“There’s always been a rise in
application in previous recessions as
it provides a natural break for people
to upgrade. This one has been no
different,” Bessio added.
The market for MBA providers
like Manchester Business School
has intensified in recent years as
top universities fight over the spoils
from nations with young and wealthy
populations.
Despite this, demand for education
is still outpacing supply in the Gulf.
French school Insead opened a
campus in January in Abu Dhabi and
joins a long list of others setting up
in the UAE, including the UK’s Cass
Business School and the London
Business School.
Rahul Dhadphale, the regional
director for the Middle East at the
London Business School, said: “I see
the competition as underlying the
demand for top level education in the
region. We’re not going to change our
faculty in response, such as bringing
in cheap professors and lowering our
tuition fees. You don’t go to a Bentley
showroom expecting to get a big
discount.
“The challenge is that this area of
the economy is still virgin territory
as still not a lot of the big schools are
here. Plus, the region hasn’t got the
stability or maturity of somewhere
like London or New York,” he added.
The university set up in 2007
at the DIFC, initially offering one
MBA stream with a September start
time and recently adding a second
beginning in January. It allows 40
to 50 students on each module and
charges $90,000 in executive MBA
tuition fees.
“The downturn in the UAE market
had an impact across the board
and people started looking at their
position and selected executive MBAs
to keep up their skill sets.
September 2010gulfbusiness 55

CORPORATE SPONSORSHIP FLAGS IN THE RECESSION
A s the recession began
to bite, a lot of Gulf
companies took a knife to
parts of their budget that
couldn’t immediately be
justified. Most importantly
this included training and the
staff tuition fees that went
towards MBA courses.
Without the support of
corporate sponsorship, a
rising number of students left
paying for courses out of their own pocket.
Ehsan Razavizadeh, the regional
director for the Middle East and North
Africa at the Sir John Cass Business
School, part of City University London,
said: “When we started in 2007 the
majority of students were sponsored by
their companies, but now most of the
people pay the tuition fees themselves
using their personal savings or loans.
“The number of applicants has
been tapered in the Gulf because a
huge number were expats, who were
subsequently made redundant. But
in the last few months, as confidence
has returned, the figures are looking
better,” said Dhadphale.
One of the university’s streams
currently has 60 students studying,
whereas as its peak a couple of years
ago that number was more like 75.
He added that there were more
entrepreneurs on the programme than
ever before. For instance, bankers
wanting to setup their own businesses
go to learn structure and the mechanics
of getting firms up and running. “As
money is hard to come by, many are here
to understand how to put businesses
together so they can attract funding.”
Facing tough competition for
students, international business
schools are arriving in the Middle
East and securing market share
Five now get corporate
sponsorship out of 60
students, whereas 22 did
in 2007 when the course
accepted 35 applicants.”
“During a recession
the first thing companies
cut is their training and
marketing budget. But
by reducing funding for
training you’re sending
a signal to your staff
that you don’t have money. Cutting the
marketing budget sends the same signal
to the world,” he added.
This trend was evident particularly
among the national population in the
UAE, which were primarily sponsored by
employers. In 2008, of the Sir John Cass
Business School’s 45 students, 10 were
UAE nationals. This number dropped to
five of the 60 in-take last year.
by offering greater choice. Hult
International Business School,
which launched its programme in
Dubai in 2008, currently offers a one-
year MBA, part-time (2 year) MBA,
Pocket MBA and MBA Honors. Plus,
it runs a Master of International
Business course.
Nick Van Der Walt, the executive
director and dean of Hult Dubai,
said the university is catering to an
increasingly diverse alumnus with
equally diverse needs.
“Hult students are more mature
and experienced than other MBAs,
with an average age of 29 years old
and an average work experience of
seven years. They come from a diverse
range of industries and the breadth
of experience that they bring to the
classroom creates an opportunity
for extraordinary shared learning
and ensures an invigorating social
environment,” he said.
BUSINESS EDUCATION
He added that 32 per cent of the
Dubai campus is made up of women.
And overall, the number of students
studying at Hult Dubai has increased
from 100 in 2008 to 228 this year.
Employers in the region have a lot
to be excited about as well, as the
availability of executive education
grows. It means more and more of
their job candidates are turning up for
interviews with an MBA on their CVs.
And it offers the organisation a
choice of talent like never before. Many
were previously held to ransom by
international professionals that turned
up expecting huge salaries. But with
the number of redundancies in recent
years across all sectors, especially
real estate and banking and finance,
companies have a chance to make a
considered choice.
They are no longer facing pressure
to hire for a specific role to meet an
immediate need. Instead, they are able
to think about where that candidate
might be in two or three years and
how he or she can fit into the overall
trajectory of the firm.
BNY Mellon’s Johnstone adds that
there is also an onus on businesses
in the region to help nurture the
growing number of universities.
“Locals companies have to support
these schools so that they can bring
qualified academics to lecture. You
can’t expect them to release a world-
class professor to the UAE to teach a
class of one or two students.”
Whether it’s Dubai, Doha or Riyadh,
Gulf financial centres will inevitably
be positioned differently to a London
or New York when it comes to the
environment for MBA study, but
what these local destinations lack in
maturity they make up for in demand
and the cold hard cash that’s needed to
foot the tuition bill.
If the current flurry of activity is
anything to go by, there are plenty of
reasons to be optimistic in future if
you’re in the education business. ■
September 2010gulfbusiness 57
PROFILE
The bull
is back
Merrill Lynch’s investment-for-all philosophy backfired when
the firm haemorrhaged billions. Saeed Maghdoori, BoA-Merrill
Lynch MENA president tells KAREN REMO-LISTANA why he’s
shaken but not stirred.
F
or Bank of America
Merrill Lynch, the
Middle East and North
Africa region is the
least of its problems.
The firm’s capital
markets services,
wealth management
and research units remain profitable;
today, and long before the merger
took place.
And, unlike its peers, there’s no
staff trimmings to speak of. In
contrast, Bank of America Merrill
Lynch (BofA-ML) has beefed up its
team to meet customer demand. And
while other regional chiefs fought to
salve wounded relations, particularly
with sovereign wealth funds, Saeed
Maghdoori was afforded at least
some peace of mind when taking up
the Dubai-based role.
“I am very happy with the way it
worked, and during difficult times we
continue to gradually grow our
business, our profitability and our
franchise,” says Maghdoori.
Describing the merger of Merrill
58 gulfbusiness September 2010
Lynch and Bank of America as a
“painless” process, the president
says the net result was a stronger
bank combining Bank of America’s
banking and lending strength with
Merrill Lynch’s wealth-management
expertise.
In the US, not only did the bank
have to reduce the number of
employees across all its businesses
in 2008 and 2009, the firm also saw
commotion among shareholders who
felt cheated in the merger deal.
Merrill Lynch was among the
many investment banks that were
put in the hot seat during the
peak of the crisis. The 96-year-old
firm that pioneered the idea that
everyone, not just the rich, should
invest in the financial markets, was
blamed for the near-collapse of the
financial system.
But these negative sentiments
seem a world away in the regional
headquarters in Dubai International
Financial Centre (DIFC) where the
looming bull logo seems to imbibe
positive vibes on visitors.
May 2010 gulfbusiness.com 59
PROFILE

“We have been fortunate on the

consolidation, especially in this
region,” Maghdoori says. “It’s given us
that balance sheet, banking credential
and corporate banking capability
that BofA has. Once you do growth
gradually, you will have a strong
base for your future because you are
not acting based on a three-month
market movement.”
Its relationship with Sovereign
Wealth Funds (SWF), which he says
is “good source of business” for the
investment bank, is indeed in an
upbeat swing. With no dispute on
record and nothing brewing, the
bank has established a smooth and
stable relationship with the world’s
emerging powerhouses.
“What I can tell you is that, from
our side, we work closely with a
number of sovereign wealth funds in
the region,” he said. “We’ve done that
in a number of years and we’ve done
that successfully. Some of the SWFs
have been our shareholders for
many years. We’ll continue to work
with them.”
BofA-ML is right to keep SWFs
happy. Despite the uncertainty,
global SWFs increased their direct
investments, a report from the US-
based SWF Institute, showed. SWFs
pumped in $92.8 billion, a 32 per
cent increase from the $69.9 billion
channelled by the SWFs in 2008.
Nearly 44 per cent of the world’s
SWF assets are controlled by Middle Bank of America Tower, New York.
East funds, mostly Abu Dhabi
Investment Authority, the Kuwaiti and Back in business
Qatari investment authorities and the
Saudi Arabian Monetary Agency.
“I believe we are highly respected in
the industry,” he said. “We have a very
T his year marks the return of
Bank of America to profit,
thanks to Merrill Lynch. Healthy
earlier, Merrill still played a big part in
attaining these profits.
According to Dealogic, BoA-ML
strong history in the region. Our name profit from trading at Merrill Lynch ranked first in US net investment
is very well known – both Merrill, as helped to cover continued losses banking revenues with a 13 per cent
well as Bank of America.” from consumer loans, propelling market share. The firm also ranked
Maghdoori says the firm – with a the bank to a first-quarter profit of number one in global leveraged loans,
team of 40 equity analysts covering $3.2 billion after two consecutive global investment grade corporate
about 40 equity stocks in the region quarters of losses. debt and in global syndicated loans.
– is looking at increasing its equity And although the second-quarter Bank of America’s average
research coverage. The bank has net income dropped three per retail deposit balances also rose
already doubled its equities and cent to $3.12 billion from $3.22 three per cent from a year ago to
research team from 2008 to 2010 and billion in the same period a year $649.6 billion.
is looking at expanding the scope of

60 gulfbusiness September 2010

 PROFILE

We work closely with sovereign the first UAE IPO this year, but with
the European and Dubai World debt
wealth funds in the region. crisis still to be resolved, Maghdoori
We’ve done that successfully opts not to speculate on when the
uptake will actually start.
for a number of shareholders “Dubai is taking positive steps in
addressing the issues and ultimately
for many years. those steps will have a beneficial
effect on the market,” he said. “You’ll
business in Saudi Arabia, where it set 2009. But in terms of assisting see over time that the steps the
up an office 18 months ago. clients in raising capital through government takes will have a positive
“We have institutional brokerage underwriting and private placements effect on the market. In fact, you can
that goes hand-in-hand with our of equity, business remains weak due already see it in the market. Compare
research product. We are in Nasdaq to dampened demand by investors today versus last year, obviously, the
Dubai, DME and we are expecting and issuers to access the Initial spreads are narrowing.”
that we will also be able to provide Public Offering (IPO) market. Over the next five years, and under
access to the Saudi market later on “We talk to our clients in terms of his guidance, the industry should not
this year,” he said. potential market opportunity and expect a drastic change in the way
Maghdoori is also hopeful that, as you know, the Shuaa IPO was BofA-ML does business.
with a merged entity, they will postponed. When market conditions The president intends to err on the
fare better in the fixed income and are encouraging and suitable then side of caution. And who can blame
corporate banking business. “We can the IPO business will start,” him as we cast our minds back to the
actually provide corporate banking Maghdoori explains. bloodshed of 2008?
services, which we were less able to “You look at the actual business Maghdoori says: “We’ll continue
do with Merrill Lynch alone,” he says. and you look at investor demand, to take a long-term view in what we
Currently most of its mandates in the market conditions in terms of want to do in MENA, as well as in
the capital markets business are on pricing. You see, we talk to our clients the UAE, and specifically in Dubai.
debt and related securities. BofA-ML holistically… I don’t really want to As a consequence, you will not
managed two of the six bank bond go into details,” he says. see a major shift in terms of our
issues in the region since September To date, the industry is waiting on approach.” ■

BoA Merrill Lynch revenues Dream team

35
31,812.0
T he BoA-ML merger rattled Wall
Street even more than the news
of Lehman’s bankruptcy. But on the
30 side of buyer, it was taken as a brilliant
24,368.0
move. Then Bank of America chief,
25 23,723.0 Kenneth D Lewis, even called Merrill’s
17,000 financial advisers the “crown
jewel” of the company. Maghdoori, on
20
$ million

the other hand, likes to think they have

the dream team – something that no
15 other wealth management company
11,250.0 has.
10 In terms of wealth management we
are unbeatable,” he says. “We have
financial advisors that have been with
0
us for decades and they stay with us
2006 2007 2008 2009 2010 for decades. The reason is because
-10 nobody can match our platforms – it’s
(12,764.0) Source: Capital IQ really unbeatable.”
-15

September 2010 gulfbusiness 61

BOARD MOVES
Robert Kay has
been appointed
managing director for
communication company
TBWA\RAAD, Abu Dhabi.
Kay previously managed
marketing for a large
region for Coca-Cola. Gulf Finance House
More recently, he was (GFH) has named Esam
chief executive of Batey Janahi as executive
advertising. He has chairman to lead the
managed large, culturally next stage of recovery
diverse staffs, multi- and the return to
million dollar budgets growth of the bank.
and P&Ls.

Rocco Forte Collection has French car manufacturer

appointed Karim Naffah as Renault has named Benoit
managing director. Turibe as marketing
Prior to joining The Rocco director for the Gulf region.
Forte Collection, Naffah Turibe brings over 10 years
gained more than 18 years of experience working with
of experience in strategy and Renault in Europe, across
finance roles in the leisure the product marketing,
and hospitality industry. events communications,
Naffah will enable Sir public relations and
Rocco Forte, founder and advertising fields.
executive chairman of the Prior to this position,
group, to devote more time to Turibe was based in
spearheading the expansion Boulogne, France and
of the business primarily via oversaw Central Marketing for the worldwide advertising
management contracts. strategy of the Renault and Dacia Brands.

Saffana Michael was appointed communications manager Steve Metcalfe has

for Boeing commercial airplanes unit in the Middle East, been appointed as
India and Central Asia. managing director of
In this role Saffana will support Boeing’s growing the Middle East region,
presence and business objectives across the region and Scott Wilson.
will work closely with Marty Bentrott, Boeing Commercial In this position,
Airplanes’ vice president – sales for the Middle East, India Metcalfe will be
and Central Asia. She will be based at Boeing’s Middle East responsible for
headquarters in Dubai, UAE. operations in 14
countries across the
region. Prior to this
appointment Metcalfe
directed the close-out
design for the US$2.5bn
Khalifa Port project in
Rabih Feghali was Abu Dhabi. From 2006 to
named business 2009 he was the director
development director for Scott Wilson North
of One to One Hotels East England operations
and Resorts. Feghali based in Newcastle.
has more than 15 years Prior, he was a partner
of experience in the of Ferguson McIlveen
hospitality industry. LLP, a 2006 Scott
Wilson acquisition.

62 gulfbusiness September 2010

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GULF BUSINESS TOP DEALS OF THE MONTH

Data monitor
52 TOP DEALS
Mergers & acquisitions
Private placement
Debt offering
Public offering

54 GCC ECONOMIC INDICATORS

Real GDP & CPI inflation
Nominal GDP & population
Fiscal balance & current account balance
GCC inflation and central bank watch

COMPANIES
DP World: Eyes $1.2bn EBITDA
Etisalat: BlackBerry effects in Q4

September 2010 gulfbusiness 65

 TOP M&A TRANSACTIONS
Deal Value ($m) Bidder Target Deal Description
542 EFG-Hermes Holding SAE Credit Libanais SAL EFG-Hermes Holding SAE, the listed Egypt-based company engaged in investment banking, securities brokerage,
(65% Stake) asset management services and private equity. The company was formed as a result of merger of Egyptian Financial
Group (EFG) and Hermes has acquired 65 per cent stake in Credit Libanais SAL, the Lebanon-based bank, from Capital
Investment Holding and Capital Investment Holding SAL, for a consideration of $542 million.
120 Argus Capital Partners; Memorial Health Group Argus Capital Partners, the UK-based private equity firm and Qatar Investment Authority, the Qatar-based
and Qatar Investment (40% Stake) investment arm of the government of Qatar has agreed to acquire a 40 per cent stake in Memorial Health Group,
Authority the Turkey-based hospital group, for a minimum estimated consideration of $120 million. Memorial Health
Group has an enterprise value of more than $300 million. The acquisition is subject to approval from
competition authorities.
69 Dabur International Hobi Kozmetik AS; Zeki Dabur International Limited, the UAE-based company with interests in health care, personal care and food
Limited Plastik; and Ra Pazarlama products and a subsidiary of Dabur India Limited, the listed India-based global ayurvedic and natural health
care company, has agreed to acquire Hobi Kozmetik AS, Ra Pazarlama and Zeki Plastik (Together the Hobi
Kozmetik Group), the Turkey-based companies engaged in providing hair and body care products, for a
consideration of $69 million.
47 Electricity Holding Dhofar Power Company Electricity Holding Company SAOC has made an offer to acquire the remaining 30.58 per cent stake in Dhofar
Company SAOC (30.58% Stake) Power Company. Dhofar Power Company, a listed Oman-based company headquartered in Salalah, engages
in the generation, transmission, distribution, and supply of electricity. Electricity Holding Company SAOC, the
Oman- based state-owned electricity company.
31 Qatar International Islamic Bank of Britain Plc Qatar International Islamic Bank QSC has agreed to acquire 78.54 per cent stake in Islamic Bank of Britain Plc.
Islamic Bank QSC (78.54% Stake) Islamic Bank of Britain Plc, a UK-based company headquartered in Charlotte, North Carolina, is a provider of
banking services. Qatar International Islamic Bank QSC, a Qatar-based company headquartered in Doha, is a
financial institution engaged in providing banking, financing and investment activities.
30 Actis Capital LLP Mediterranean Smart Cards The management of Mediterranean Smart Cards Company (MSCC), the Egypt-based smart card payment
Company processing services to banks, backed by Actis Emerging Markets 3 fund, the UK-based fund of Actis Capital LLP,
the UK-based private equity firm, has acquired the company in a management buyout transaction, for a total
consideration of $30 million.

- Bank Audi sal Audi Arabeya Online Brokerage Bank Audi sal Audi Saradar Group, the listed Lebanon based bank offering commercial and corporate banking,
Saradar Group (90% Stake) retail banking, private banking and investment banking products and services, has agreed to acquire 90 per
cent stake in Arabeya Online Brokerage, the Egypt based online securities trading firm, from Naeem Holding,
the listed Egypt-based investment bank and Hisham Tawfiq, the Egypt based private invest with an interest in
securities trading firm, for an undisclosed consideration.
Notes: Deals are based on the geography of target, bidder or vendor being in the Middle East, for the period between July 21, 2010 and August 20, 2010. Based on announced deals, including lapsed and
withdrawn bids. Where deal value is not disclosed, the deal has been entered based on turnover of target exceeding $10 million. Activities excluded from the table include property transactions and restructurings
where the ultimate shareholders’ interests are not changed. Source: Mergermarket

MIDDLE EAST QUARTERLY M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010  VALUE
FROM 2005 TO AUGUST 20, 2010
Transport Pharma/Medical/ Construction Real Estate
14,000 50 Leisure 13.8% Biotech 3.1% 0.1% 14.9%
Number of deals
Value ($m)

12,000 6.3%
Value 40
10,000 Agriculture
Volume TMT 8.6% 0.4%
8,000 30
6,000 20 Defence
0.7%
4,000 Energy/
10 Mining/
2,000 Utilities 5.4%
0 0 Consumer Business Financial Services Industrials and
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2005 2006 2007 2008 2009 2010 2.5% Services 1.1% 29.3% Chemicals 13.8%

MIDDLE EAST ANNUAL M&A ACTIVITY MIDDLE EAST ACTIVITY BY INDUSTRY SECTOR YTD 2010  VOLUME
FROM 2004 TO AUGUST 20 , 2010
Transport Pharma/Medical/ Construction Real Estate Agriculture
30,000 200 2.4% Biotech 4.9% 1.2% 8.5% 1.2%
Value
25,000 Volume Leisure Defence
150 2.4% 1.2%
20,000
Industrials
Number of deals

15,000 100 TMT and

Value ($m)

20,7% Chemicals
10,000 17.1%
50
5,000 Energy/
0 0
Mining/ Consumer Business Services Financial Services
2004 2005 2006 2007 2008 2009 2010 Utilities 7.3% 9.8% 7.3% 15.9%
Mergermarket tracks all M&A deals of more than $5m where the target, bidder or parent is a Middle Eastern company.

66 gulfbusiness September 2010

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 TOP PRIVATE PLACEMENTS
Value ($m, Target/Issuer Buyers/Investors Transaction comments
Historical rate)
994.31 Akbank T.A.S. – Akbank announced a private placement of notes for gross proceeds of $994,310,000 on July 15, 2010.
The notes have a coupon of 5.125 per cent, mature on July 22, 2015. Interest will be paid on the 22nd of each
July and January. Banc of America Securities LLC, Citigroup Global Markets Limited, J.P. Morgan Securities Ltd., and
Standard Chartered PLC served as lead managers for the transaction. Simon Porter, Laurence Pettit, Nicolas Rogivue,
and Natasha Izmaylova of Baker & McKenzie, LLP and Cerrahoglu Law Firm served as legal advisors and Ernst & Young
LLP and PricewaterhouseCoopers LLP served as accountants to the company. Allen & Overy LLP and Paksoy & Co.
served as legal advisors to the managers. Each initial purchaser will purchase $250 million amount of notes.
800.0 AMMROC LLC Sikorsky Support Services, AMMROC announced that it has received $800 million in equity funding from new investors Abu Dhabi Aircraft
Inc.; Abu Dhabi Aircraft Technologies PJSC and Sikorsky Support Services, Inc. on July 19, 2010. Each investor purchased 50 per cent
Technologies PJSC stake in the company.
40.0 Metito Utilities Ltd International Finance Metito Utilities announced a private placement of series A preference shares for gross proceeds of $40 million
Corporation; Watani on June 27, 2010. The round included participation from NBK Capital-GSC Mezzanine Fund LP, a fund managed
Investment Company, by GSC Group, Private Equity Arm and Watani Investment Company, Private Equity Arm and returning investor
Private Equity Arm; GSC International Finance Corporation. Both the investors will invest $20 million each. The funding will be raised in
Group, Private Equity Arm two tranches. Gibson, Dunn & Crutcher LLP served as legal advisor to the company. Creighton Smith of Vinson
& Elkins LLP served as legal advisor to NBK Capital-GSC Mezzanine Fund LP.
15.0 eXelate Media LTD. Menlo Ventures; Carmel eXelate Media LTD. announced that it has raised $15 million in its second round of funding led by new investor
Ventures Menlo Ventures and returning investor Carmel Ventures on August 3, 2010. As a part of the round, Mark Siegel,
Partner at Menlo Ventures joined the company’s board of directors.
9.0 Pentalum Evergreen Venture Partners; Pentalum Technologies Inc. announced a private placement of equity for gross proceeds of $8.7 million on
Technologies Inc. Cedar Fund July 6, 2010. The company will issue the securities pursuant to Regulation D in the transaction. The round will
remain open for more than a year. As of July 19, 2010, the company has raised $2.2 million from four investors.
8.5 Solido Ltd. Fortissimo Capital Solido Ltd. announced a private placement for minimum proceeds of $6 million and maximum proceeds of
$8.5 million on August 2, 2010. The investment was made by Fortissimo Capital.
2.0 Nephera Ltd. Evergreen Venture Partners; Nephera Ltd. announced that it has raised $2.85 million in its second round of funding on August 11, 2010.
Aurum Ventures MKI Ltd.; The round saw participation from existing investor Misgav Venture Accelerator and other investors Evergreen
Misgav Venture Accelerator Venture Partner and Aurum Ventures MKI Ltd.
Closed/Registration Effective Date: [7/17/2010-8/17/2010] Geographic Locations (Target/Issuer): Middle East (Primary) OR North Africa (Primary) Source: Capital IQ

TOP PUBLIC OFFERINGS

Value ($m, Target/Issuer Transaction comments
Historical rate)
1,030.21 Republic Of Turkey Interest on the notes will be payable each year on March 30 and September 30 of each year, commencing on September 30, 2010. Listing
fees has been converted at the rate of €1=$1.3063 taken from www.oanda.com as on July 29, 2010. The company intends to list the notes on
Luxembourg Stock Exchange.
173.32 Al Jouf Cement JSC The subscription period was from July 19, 2010 - July 25, 2010. KSB Capital Group also acted as the financial advisor for the offering. Alinma Bank is acted
as a receiving bank for the offering.
33.05 DD Konut Finansman A.S. The term of the bonds is three years with quarterly coupon payments. The bonds were issued through Akbank and Ak Investment & Securities.
4.64 Gedik Investment The bookbuilding for the offering took place from July 21, 2010 to July 22, 2010.
Securities Inc.
8.16 Muscat Finance Co. Ltd. Muscat Finance Co. Ltd. (SAOG) (MSM: MFCI) is undertaking a rights issue wherein it is offering one new share for every 2.89 shares held by
the shareholders as on record date, June 15, 2010. The company has reserved two million shares for its employees. The trading of rights starts
on June 22, 2010 and ends on June 28, 2010. The subscription of shares starts on June 21, 2010 and ends on July 05, 2010. The company has
secured private placement undertakings from Mechanical Services Company Ltd. LLC, Fincorp Investments LLC, Al Siraj Investment Holding LLC
and HBG Holdings who have committed to take up the shares which are not subscribed in the rights issue. Said Al Shahry Law Office is acting as
legal advisor for the rights issue.
Closed/Registration Effective Date: [7/17/2010-8/17/2010] Geographic Locations (Target/Issuer): Middle East (Primary) OR North Africa (Primary) Source: Capital IQ

TOP DEBT OFFERINGS

Value ($m, Historical rate) Target/Issuer Transaction comments
1,030.21 Republic Of Turkey “Interest on the notes will be payable each year on March 30 and September 30 of each year, commencing on
September 30, 2010. Listing fees has been converted at the rate of €1=$1.3063 taken from www.oanda.com as
on July 29, 2010. The company intends to list the notes on Luxembourg Stock Exchange.”
33.05 DD Konut Finansman A.S. “The term of the bonds is three years with quarterly coupon payments. The bonds were issued through Akbank
and Ak Investment & Securities.”
Closed/Registration Effective Date: [7/17/2010-8/17/2010], Geographic Locations (Target/Issuer): Middle East (Primary) OR North Africa (Primary) Transaction Primary Features: Public Offering - Fixed-Income
Offering. Source: Capital IQ

68 gulfbusiness September 2010

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 COMMODITY PRICE DATA AND FOREIGN EXCHANGE PRIVATE EQUITY
Month WTI crude Gold price Euro/UAE
($/barrel) ($/ounce) Dirham When powder goes dry
April 84.21 1148.7 4.94
May 72.46 1205.4 4.64 Private equity firms in MENA suffered a
June 68.52 1232.9 4.49 substantial decline across all activities from
July 76.32 1194.11 4.69 fund-raising, investing the capital raised and
Source: Bloomberg, Dubai Chamber
exiting investments. According to Gulf Venture
Capital Association’s 2009 annual report, the
GCC ECONOMIC FORECASTS sector has only raised 20 per cent of what
Updated as of: Nominal GDP ($ billion) Population it raised in 2008. What is more alarming
29/07/2010 is that of the six new funds in 2009, only
2008 2009F 2010F 2011F 2008 2009F 2010F 2011F
two were able to make a first close and this
S.Arabia 476 370 417 457 24.9 25.5 26.2 26.8
barely makes up a quarter (23 per cent) of the
UAE 261 223 239 253 4.8 4.9 5.1 5.2 announced amount. And of the $32.6 billion
Qatar 100 85 107 124 1.4 1.6 1.7 1.8 announced from 2005 and 2008, only 55 per
Kuwait 158 118 133 144 3.4 3.5 3.6 3.7 cent has been raised. GVCA warns that further
Oman 59.9 49.7 56.7 62.5 2.8 2.8 2.8 2.9 closes from funds announced prior 2009 are
already unlikely to happen given to current
Bahrain 21.2 19.6 20.9 22.2 0.8 0.8 0.8 0.8
market conditions.
GCC 1077 867 975 1064 38.1 39.2 40.2 41.2 The report opines that some of the funds
may never reach financial closure. Other funds
GCC ECONOMIC FORECASTS
may just reduce their target size such as Abraaj
Updated as of: Real GDP Growth (%) CPI Inflation (% avg.) Buyout Fund 4, which lowered its intended
29/07/2010
2008 2009F 2010F 2011F 2008 2009F 2010F 2011F target size from $4 billion to $2 billion.
S.Arabia 4.3 0.1 3.2 3.9 9.9 5.1 4.8 5.4 Despite the many speculation of 2009 being
UAE 5.1 -1.4 1.0 2 12.3 1.6 1.0 2.8 a stellar vintage year – with a supposed
abundance of dry powder (reserved cash)
Qatar 15.8 9.0 11.3 9.6 15 -4.9 1.2 3.4
in the region – it still ended with a 75 per
Kuwait 6.4 -2.2 2.5 3.1 10.5 4.0 3.0 4.0 cent decline in the total size and 65 per
Oman 12.3 3.8 4.6 4.8 12.6 3.5 4.0 4.8 cent drop in the number of investments.
Bahrain 6.1 1.8 2.4 2.8 3.5 2.8 2.5 3.0 Investment deals were even less than those
GCC 6.4 0.6 3.6 4.2 11.1 2.8 3.1 4.2 recoded in 2005. One of the major reasons

GCC ECONOMIC FORECASTS TISSUES & HYGIENE

Updated as of: Fiscal Balance (% of GDP) Current Account Balance (% of
29/07/2010 GDP) Recession hits sales growth
2008 2009F 2010F 2011F 2008 2009F 2010F 2011F
Tough economic conditions this year have
S.Arabia 32.6 -3.2 2.9 6.2 27.8 7.2 8.4 10.5
reshaped consumer shopping trends in terms
UAE 21.7 5.4 9.7 12.1 8.5 -3.4 6.7 6.9
of higher demand for private label and non-
Qatar 10.6 13.0 8.0 9.0 33.0 16.0 21.9 30.0 brand substitution. First, low consumer
Kuwait 26.9 23.0 20.0 23.0 40.9 25.4 31.5 34.7 confidence helped private-label brands rise to
Oman 22.6 -0.7 3.3 5.1 9.1 0.8 2.6 3.2 the mainstream, as they gained consumer trust.
According to Euromonitor International, the
Bahrain 7.7 -5.7 -0.4 0.9 10.6 0.9 5.0 6.0
growth of private label has also been supported
GCC 26.0 4.2 7.3 10.0 24.1 7.2 12.2 14.8
by increasing availability in most supermarkets/
Source: BoFA Merrill Lynch Global Research, Bloomberg, EcoWin, national statistics offices
hypermarkets and rising consumer awareness
of private-label products, particularly the
GCC INFLATION AND CENTRAL BANK WATCH LATEST OFFICIAL FIGURES
fact that they are often produced by the same
Updated as of: CPI Inflation (% YoY, avg) Policy Rate (%) manufacturers as branded ones. Second, the trend
29/07/2010
of shifting to cheaper product alternatives has
S.Arabia Jun-10 5.5 O/N reverse repo rate 0.25 been reinstated in 2009, with some consumers
UAE May-10 0.9 O/N repo rates 1.00 using tissues or cloths instead of kitchen towels
Qatar May-10 -3.6 O/N deposit rate 2.00 or household cleaning wipes.
Kuwait Apr-10 2.9 O/N repo rate 0.75 Multinationals have historically elicited
strong customer loyalty and led home care
Oman Apr-10 3.1 One-week repo rate 2.00
tissue and hygiene, however they face growing
Bahrain May-10 2.4 One-week deposit rate 0.50 competition from regional players and private
Source: Bloomberg, EcoWin, national official data label operators. Consumers in 2009 has helped

70 gulfbusiness September 2010

 Fund raising cycle
12000 80
Fund raising cycle
10000 70
12000 60
80
8000
10000 50
70 COMPANY WATCH
6000
60
40
8000
4000 30
50
6000
2000
Fund raising cycle is the limited access DP World
20
40
to and increased cost
40000
12000
2000 2005
10000
2006 2007 2008 2009
80
10
30
70
20 of financial leverage,
Global operator eyes $1.2bn EBITDA
Announced ITS Yet to be raised10
60
80000 which impaired the DP World, despite being associated towards origination and destination
2005 2006 2007 2008 2009 50
6000 ability of large funds with its debt-laden parent company, traffic. In addition, the mix retained by
Announced ITS Yet to be raised40
4000 to complete major is well positioned to take advantage the world’s fourth-largest container
30
2000
transactions. In fact of the positive developments taking terminal operator implies more
20
0 10 only two transactions shape in the global container stability and higher yields than
2005 2006 2007 2008 2009 were greater than terminal industry. comparable operators that focus on
Investments
Announced ITS Yet to be raised $50 million. DPW CEO Mohammed Sharaf, told specific regions or those that cater
80 5000
70 Investments
In terms of exit, the Gulf Business that the world’s primarily to transhipment traffic.
60 4000 significant decrease fourth-largest container terminal Although DPW 2009 revenues
80
50 5000
3000 in multiples and operator is confident it would meet shrank 10.8 per cent to $2.9 billion
70
40
60 4000
30 2000 lack of stock market analyst forecasts of $1.2 billion and net profits dropped 30 per cent
50
20 3000
40 1000 liquidity restricted exit EBITDA for 2010, a 23 per cent to $333 million, the company still
10
300 Investments 02000 opportunities. There increase from last year. “We are performed better than its peers. While
20
80 2004 2005 2006 2007 2008 2009 1000
10 5000 was only one exit – the happy with that expectation and we global container volumes fell 12 per
700 No of deals Average size 0
60 2004 2005 2006 4000 trade sale of Reliance are confident that we will meet that,” cent, the firm reported only 6 per cent
Total 2007 2008
value ($mn) 2009
50 3000 Petroleum – by the Sharaf said. The company recorded decrease in gross volumes.
40 No of deals Average size
30 Total value ($mn) 2000 Global Opportunistic $974 million EBITDA in 2009, a 9 per The global operator reported it
20 1000 Fund 2 for a value of cent drop from $1.07 billion in 2008. handled 23.7 million TEU across its
10
0 Exits 0 $49 million against a DPW remains the single most portfolio of 50 operating terminals
2004 2005 2006 2007 2008 2009 purchase price of $33 diversified operator globally in in the first six months of 2010, an
20 3500
Exits No of deals Average size 3000 million. Historically, terms of geographic coverage, with increase of 16 per cent against the
15 Total value ($mn) 2500
20 3500 the most popular a portfolio that is heavily weighted same period.
2000
3000 options have been
10
15 Key stats
1500
2500
public market offering 2005 2006 2007 2008 2009
5 1000
2000
10 Exits and trade sales. Both Revenue ($m) 675 3,487 2,731 3,283 2,929
500
1500
avenues, however, are EBITDA ($m) 348 736 925 1,075 974
2005 01000
3500
2004 2005 2006 2007 2008 2009 expected to remain scarse Net profit ($m) 240 192 1,105 482 333
3000
500 Source: Exotix Ltd
150 No of deals Total value ($mn)2500 in the coming year.
0
2004 2005 2006 2007 2008 2009
2000 Etisalat
10 No of deals Total value ($mn)1500
5 1000 BlackBerry effects to show in Q4
500
regional players advance and private-label products to rise Etisalat’s net profit of Dhs1.9 billion for Q2 generators of revenue and profitability,
0 0
to the
2004 mainstream,
2005 2006 2007as 2008
low consumer
2009 confidence fuelled is well below the Bloomberg consensus Moody’s believes that the conversion
tradingNodown
of dealsto cheaper brands.
Total value ($mn) Regional manufacturers estimate of Dhs2.025 billion. The telecom’s rate of customers to permitted data
have started to copy some of the multinationals’ value- consolidated net profit for 1H10 was services and the industry’s ability to
added benefits, such as Fine Hygienic Paper FZE launching Dhs3.9 billion, a 15 per cent drop from maintain the momentum for mobile
a premium range of nappies/diapers, while private label Dhs4.6 billion during the same period data services will be more important
operators have even started launching seasonally themed in 2009. But analysts are opting to wait than any short-term dips in revenue in
ranges, such as MAF Hypermarkets’ Carrefour No.1. the release of full financial results before determining the impact on Etisalat.
reviewing their forecasts and target price. The credit agency says the majority
TISSUE AND HYGIENE IN THE UNITED ARAB EMIRATES Moody’s warns that the financial of the estimated 500,000 BlackBerry
Forecast Retail Sales of Tissue and Hygiene by Sector: impact on Etisalat of the announced users in the UAE will over time
Value 2009-2014 ban on all BlackBerry data services in make the switch to other alternative
AED million 2009 2010 2011 2012 2013 2014 the UAE will not become apparent until permitted mobile data devices.
Retail Hygiene 394.7 442.8 498.9 566.2 637.8 708.3
the announcement of the company’s Q4 According to the ITU, mobile
Sanitary Protection 122 134.7 149.7 167.8 186 203.5
Nappies/Diapers/Pants 260 294.8 335.3 383.8 436.7 489 results, which Etisalat is likely to release broadband subscriptions in UAE
Incontinence - - - - - - in March 2011. reached a penetration rate of 40.3 per
Wipes 7.8 8.2 8.7 9.2 9.7 10.2 Although BlackBerry services are cent at the end of 2008, equivalent to
Cotton Wool/Buds/Pads 5 5.1 5.3 5.4 5.6 5.7 thought to be one of Etisalat’s key approximately 1.8 million users.
Retail Tissue 107.8 116.7 127.2 140.9 154.5 167.9
Toilet Paper 32.5 35 38 41.7 45.2 48.2
Tissues 70.1 76.3 83.7 93.4 103.3 113.2 Key stats
Kitchen Towels 0.6 0.6 0.7 0.7 0.7 0.8 FY08(A) FY09(A) FY10(F) FY11(F) FY12(F)
Paper Tableware 4.5 4.6 4.8 5.1 5.4 5.7 Revenue (Dhsm) 29,360 30,831 32,017 33,399 35,050
Retail Tissue and Hygiene 502.5 559.4 626.1 707 792.3 876.1 EBITDA (Dhsm) 9,036 11,349 11,660 12,206 12,695
Source: Official statistics, trade associations, trade press, company research, trade Net profit (Dhsm) 8,511 8,836 8,361 9,055 9,875
interviews, Euromonitor International estimates Source: Company data, Rasmala forecasts

September 2010 gulfbusiness 71

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COMPETITION

W
A TWO-NIGHT STAY AT THE
RITZ-CARLTON, BAHRAIN HOTEL & SPA

T
he Ritz-Carlton, Bahrain Hotel & Spa, situated on T HE P R I Z E
the north coast of Bahrain, is located within a
Two night stay in a clubhouse with
20-acre urban resort complex on the seafront of access to the club lounge and
Manama. It is only 11km from the airport, 3km from complimentary food and beverages
Manama City Centre and close to the Bahrain International throughout the day.
Exhibition Centre.
The hotel features 245 rooms and suites, each with HOW T O W I N:
unparalleled views of the city or sea, and 23 villas. The
To enter, log onto www.motivatepublishing.com/
Sports Club & Spa offers an extensive menu of treatments competitions and answer the question below.
and facilities, such as an indoor and outdoor swimming pool,
The largest conference room at the
four tennis courts, an indoor squash court and a magnificent
Ritz-Carlton, Bahrain can hold:
Turkish bath.
a) 800 people
Tailor-made resort offerings, complemented by state-of-the-art
b) 900 people
technology and facilities for personalised business meetings and c) 1,000 people
functions, make this unique venue an exclusive yet energising
destination. There are four restaurants, one lounge, one bar, a Terms and conditions:
poolside café, a gourmet shop and 24-hour in-room dining. This voucher cannot be redeemed in cash.
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Reservations are required and subject to
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every occasion, hosting up to 1,000 guests at any one time.

September 2010 gulfbusiness 73

F
LIFESTYLE TRAVEL
Malay foray
Kuala Lumpur oozes capitalism and culture in
good measure.
A
s global businesses hop
into the Islamic finance
bandwagon, decision makers
increasingly find themselves setting
their feet in Kuala Lumpur, one of
the world’s fastest growing countries
and now the largest issuer of Sukuks.
Kuala Lumpur is a melting pot of
Malaysia’s key political, commercial
and social features. From mosques
to mega-malls to mega-bucks, the
city boasts a vibrant cultural and
business tapestry.
For shoppers, Kuala Lumpur offers
a fusion of traditional Asian cultures
and cutting-edge panache across
more than sixty shopping malls.
For a more authentic experience,
head to Jalan Petaling Stree in
the city’s downtown district, this
thriving Chinatown hub is one
of the places to rub elbows with
locals, as well as visitors indulging
in authentic Chinese dishes at
reasonable prices. Merdeka Square is
also worth a visit – a former centre
of British administration for the
region, businessmen and politicians
rubbed shoulders and sealed deals
here once upon a time.
The square will lead you to the
Central Market, which first opened
Feast Village
Feast Village is an
enticing mini-metroplis of
restaurants representing
a panorama of the world’s
cuisine. From tapas to Thai
to Texas steaks, this is no
ordinary mall food court,
but rather multifarious
gourmet dining in unique
individual settings. Be
sure to stay after dinner
to enjoy the live nightly
entertainment.
74 gulfbusiness September 2010
as a wet market a century ago but has
now broadened to become home of all
things exotic and Malaysian.
Amongst the hustle and bustle of
the city, it is not difficult to become
lost in the streets and Menara KL
telecommunication towers is an ideal
place to get your bearings. The views
from the observation deck and the
city’s famed revolving restaurant
stretch miles into the distance.
Once the sun goes down, catch a
cab south to the area known as the
Golden Triangle, with Jalam Bukit
Bintang and Jalan Sultan Ismail at its
core. Shuffle a move or two with the
smartly dressed youth of the city at
bars and nightclubs as intense as any
in New York or Berlin.
Factfile
r
The Malaysian GDP per capita in
2009 was $14,800
r Malaysia’s economy grew 8.9 per
cent year-on-year in Q2, with growth
expected to exceed six per cent
in the full year (Central Bank)
r Malaysia is a prime source of the
world’s rubber and palm oil
r The country is the world’s largest
exporters of semiconductor devices.
The Pavilion
Spread over 1.3 million
square feet, the Pavilion
is the Rodeo Drive of
Malaysia with brands
such as Gucci, Versace,
Bulgari and more across
a total of over 450 stores.
It is also home of the
Pavilion Crystal Fountain,
the tallest Liuli Crystal
Fountain in the country
according to the Malaysian
Book of Records.
 Batu Caves
The focal point of the
Hindu festival of
Thaipusam in Malaysia,
the cave is one of the most
popular Hindu shrines
outside India. Rising
almost 100 metres above
the ground, Batu Caves
temple complex consists
of three main caves and a
few smaller ones. To reach
it, visitors have to climb a
steep flight of 272 steps.
Spa Village
Indulge in a rejuvenating
or relaxation therapy at
the peaceful Spa Village
located on the fourth
floor of the Ritz Carlton.
Whether you choose an
individual treatment or
treat your colleagues to a
Group Sensory Exploration
that will erase the stresses
of tense negotiations, you
will float from the spa in a
state of bliss.
September 2010 gulfbusiness 75
F LIFESTYLE LEISURE
All-terrain
luxury
Michael Gordon vrooms
across Jebel Hafeet in the
new Porsche Cayenne.
I
have been sceptical of Porsche’s
off-road offering for some time;
doubting that the performance
that makes the company’s sport cars
special could be transformed into a
two and a half tonne SUV. But having
test-driven-one I am compelled to
eat my words.
Once you have the seat set
right (with 18 levels of correction
available), the air-con adjusted
(which goes as low as a chilling
1600C), your destination punched
into the touchscreen sat-nav and
your tunes selected it is a decidedly
comfy drive and quite akin to a
normal saloon. There is a dazzling
array of buttons to adjust every
road-handling technology and
once sports mode is selected the
4.8-litre biturbo-V8 engine truly
comes to life.
This SUV will fly from 0 – 100 km/h
in 4.7 seconds, with a top speed of
ROBBIE GREENFIELD IN THE SWING
Monty takes a swing at Ryder Cup
E
uropean Captain Colin
Montgomerie knows better than
most that the Ryder Cup has
always been a curious anomaly. Back in
Monty’s heyday, the biennial matches
offered a chance for the less heralded
players on the European Tour to beat
their heavyweight counterparts in an
event that drew the US stars out of their
comfort zone.
Next month the Scot will take what
he describes as the ”strongest European
side ever assembled” to Celtic Manor.
But on-paper advantages will matter
little by the time the first ball is struck
in Wales. Times have changed, and
so have Europe’s chances of success.
Although Monty would never admit as
much, the matches at Celtic Manor no
76 gulfbusiness September 2010
278 km/h (172 mph). However, there
is a considerable turbo lag.
The engine is complemented by
an eight-speed Tiptronic S gearbox,
with active all-wheel drive, which
is quite amazing on winding roads.
We took the Porsche on one of the
windiest roads in the Gulf, up the
UAE’s Jebel Hafeet mountain pass
and it accelerated through every
bend effortlessly, although its sheer
weight made the downhill run a lot
more challenging, as it would plough
on nose first, away from the apex, in
the tightest of bends.
So it has the grunt but not the
longer constitute the highlight of the
European Tour stars’ season. Padraig
Harrington, Paul Casey and Justin
Rose confirmed this by snubbing
their captain’s plea to play in the final
qualifying event at Gleneagles, in
favour of lucrative US Tour events.
The most successful European
sides of the past have all played with
a fighting underdog’s spirit that will
be impossible for Monty to replicate
come October. In something of a
role reversal, the opposite applies to
Corey Pavin, who could have all the
motivational skills of David Brent and
still fire up his team into a frenzy.
Whether it be the ignominy of so many
heavy defeats, or simply the diluting
of egos, there is no doubt that America
finesse for racing and it lacks the
space of many SUVs, but give it a
long straight open road and little
will pass you by and the ride comfort
will leave you shocked at the speed
you are doing. Note: For those
adverse to speeding fines, switching
the automated cruise control on is
the best option.
Few could argue that this is
undoubtedly the ugly duckling
of the Porsche stable, but taste
is very subjective, and the sales
figures prove that more than a few
consumers have a soft spot for
the Cayenne. ■
has fallen back in love the Ryder Cup.
Bubba Watson’s reaction to his
painful playoff loss to Martin Kaymer
at the US PGA echoed the sentiments
of other US rookies: “I made the Ryder
Cup and that’s all that matters.”
As the PGA Tour becomes an ever-
happier hunting ground for Europe’s
stars, so their appetite for the Ryder
Cup diminishes. With home advantage
and a team compromising almost
solely of the world’s top 25, Monty will
be heavily tipped to reclaim the Cup.
But he of all people should remember
that reputations count for nothing in
an event where David always seems to
get the better of Goliath. ■
Robbie Greenfield is the editor of Golf
Digest Middle East. robbie@motivate.ae

CHARLES POCOCK ART EXPERT-AT-LARGE
Little Italy
Tuscany houses some of the world’s most coveted Islamic art collections
The majority of Islamic art is held
in Tuscan and Venetian Collections,
secular and ecclesiastical, due partly
to trade and conflict, this being for
both states. Within this feature we
look at Tuscany, specifically the cities
Florence and Pisa.
Pisa is famous for its leaning
tower within the Campo dei Maricoli
complex, containing the Campanile
(Leaning Tower), Duomo, Baptistery
and Camposanto. On the roof of the
Duomo was placed a Bronze Griffin,
half-lion, half-bird; booty from a
Pisan battle in the 11th/12th Century
Bronze Griffin, inscription:
1. Perfect benediction, complete wellbeing
2. Perfect joy, eternal peace and perfect
3. Health, happiness and good fortune for
the owner
in the southern Mediterranean, in
either Spain, Sicily or Tunisia and
the original is now held within the
Museo dell’Opera del Duomo, within
the Miracoli complex.
This incredible object is
recognised as one of the most
important and famous Islamic art
objects held in any international
collection. Its origins have been
discussed heavily, being either
Fatimid from Sicily or Tunisia or
from Al-Andalus, with a number of
art historians still undecided as to
its origins. The common consensus
is that the Griffin was made in Spain
and looted by the Pisans from Sicily.
In the 18th century it was regarded
as a mediocre antique and in the late
19th century it was finally identified
as Islamic. Its date of production has
been placed in the 11th century. The
upper part of the Griffin is covered
with engraved decoration, following
a typically Islamic decorative syntax,
the breasts of the object carry a
frieze of calligraphy in Kufic script.
A replica has been placed on the
roof of the Duomo, the original being
held in the Museum. The tragedy is
the work is poorly displayed, placed
in the corner of poorly lit room and
there is limited information relating
to the piece.
Pisa also houses the Museo
Nazionale de San Matteo, which
holds one of the most important
collections of Fatimid ceramics held
within Italy. These ceramic bowls
have a lustre-painted decoration,
produced in Fatimid Egypt in the
second half of the 11th century and
are known as ‘bacino’’.
Moving to Florence, the Medici
collections of Islamic art are spread
over a number of institutions, with the
bulk being held at The Bargello; The
Laurentian Library holding Arabic,
Ottoman and Persian manuscripts
and a few pieces at the Museo degli
Argenti at The Palazzo Pitti.
The Bargello holds ‘La Sala
Islamica’; a room devoted to Islamic
art, with the exhibited collection
containing textiles on the walls and
cases containing a variety of objects
including ceramics, ivory, textiles
and metalwork. The Museo Stefano
Bardini, recently reopened, holds
an impressive collection of Oriental
carpets, which is definitely worth a
LIFESTYLE ART
visit and is held in the southern part
of the city, in the area where I used to
study in 1992.
Moving to the north of the city,
one of the undiscovered treasures of
Florence is the Museo Stibbert. It
contains one of the greatest museum
collections of Islamic weapons in
the world.
The museum was founded by
Frederick Stibbert (1836 - 1906). The
Stibbert family’s extreme wealth
came from Frederick’s grandfather,
Giles Stibbert, who was the
commander-in-chief for the British
East India Company at the end of the
18th Century.
Frederick Stibbert inherited the
entire estate from his grandfather
and instead of working dedicated
his life to collecting various objects
and turned his villa into a museum.
In 1906, when Stibbert died, his
collection was given to the city
of Florence and was opened to
the public.
Stibbert’s collecting of Islamic
arms commenced in 1860 and is
predominately made up of Ottoman
arms and armour, with the highlight
of the collection being a dagger from
the collection of
Suleiman The
Magnificent
(stolen in 1977,
found on the art
market in 1998).
With the closing
down of the
Ottoman Arsenals
in 1839 by Sultan
Abdulmecid,
Stibbert (1838-
1906) was in a
position to build this incredible
collection on this body of pieces.
Stibbert built an incredible collection
that is nearly unmatched, with The
Furusiyya Art Foundation Collection
coming very close. ■
Charles Pocock runs the Meem
Gallery, Dubai, a leading specialist in
the Arab art world.
September 2010 gulfbusiness 77
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78 gulfbusiness September 2010

 ESSENTIALS BOOKS

Who to blame for the crash?

This month Gulf Business ponders the multiple factors
that caused the global financial crisis.

W ho caused the recession? Charles

Dumas’s attempts to answer one
of the world’s most potent questions
in Globalisation Fractures (Profile
Books). He fleshes out hard-economic
theories into real-life situations.
The financial crisis was actually a
debt crisis. But who to point the finger
at? It’s difficult to tell. Is it China
who fuelled the debt boom or is it
the US policymakers and their
inadequate regulation?
Perhaps it’s the banks themselves
for irresponsible lending, but bankers
– especially investment bankers – pass
the blame to the rating agencies, which
gave AAA ratings to securities that
were subsequently sold at 25 cents in
the dollar. And the list goes on.
Dumas offers a blow-by-blow
account of exactly how the world’s
worst recession, the one we’re in
now, started.
He proffers that the “fundamental
shock” of globalisation created
imbalance through its ‘no rules, no
limits’ freedom.
Just like a lye and hydrochloric acid
fusion – two harmful substances –
where the result of the amalgamation
is not harmful, but, instead, neutralised
into salty water, the recession was the
unexpected result of uncontrollable
forces – namely, free markets.
Dumas concludes that the interaction
of individual country policies and
behaviours is the root of the problem.
What happened, as Dumas put it, was
impossible to stop. Just like watching a
slow-motion car crash.

Syrian Arab Republic

Ministry of Electricity
Public Establishment of Electricity for Generation & Transmission (“PEEGT”)
Al-Nasserieh 180-250MW Independent Power Producer (“IPP”)
Notice of Request for Qualifications (“RFQ”)
The Government of the Syrian Arab Republic is committed to develop Public-Private Partnerships in order to promote private sector investment
in infrastructure.
The Ministry of Electricity intends to diversify its sources of power generation in the country and meet growing electricity demand through the
development of a new HFO and/or Gas fired 180-250MW IPP at the Al-Nasserieh power complex (the “Project”).
The Project is promoted by PEEGT, an entity under the control of the Ministry of Electricity, who is solely responsible for planning, development,
operation and maintenance of Syria’s generating plants and transmission networks.
PEEGT appointed the International Finance Corporation (“IFC”), a member of the World Bank Group, as Lead Advisor to assist in the structuring
and implementation of the first IPP in Syria. IFC is being assisted by technical consultant, Mott MacDonald, and legal counsels Allen & Overy
and Sarkis Law of Syria.
PEEGT now invites interested parties with experience in design, financing, construction, operation and maintenance of IPPs to submit Qualification
Statements in accordance with the Al Nasserieh IPP Round II RFQ document. The document can be requested from one of the contacts listed
below or downloaded from www.syriaippproject.org or www.peegt.gov.sy.
Applicants are required to submit their Qualification Statements together with a non-refundable processing fee of 500 Euros (or Syrian Pounds
30,000) on or before September 27, 2010 at 13:00 Hours (Damascus time).
Any requests for additional information and/or questions concerning the RFQ document may be submitted to the contacts listed below:

PEEGT IFC – Lead Advisor

Eng. Hisham Mashfej Stefano Giacomino | John Leber | Marwa Al-Nasaa
Director General International Finance Corporation
Public Establishment of Electricity for Generation and Transmission PO Box 118071, Dubai, United Arab Emirates
PO Box 3386, Damascus, Syria | Fax: +963 11 222 9062 Tel: +971 4 360 1000 | Fax: +971 4 360 1010
dg@peegt.gov.sy sgiacomino@ifc.org | jleber@ifc.org | malnasaa@ifc.org

September 2010 gulfbusiness 79


Gulf Business Hotel Collection members offer guests complimentary copies of
the GCC’s premier business magazine Gulf Business.
United Arab Emirates
AL RAHA BEACH HOTEL
Abu Dhabi
Al Raha Beach Hotel, created to
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Tel 00971 4 3325555
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SHANGRI-LA
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Offers 301 luxuriously appointed guest
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Tel 00971 4 3438888
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Qatar
INTERCONTINENTAL DOHA
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JUMEIRAH EMIRATES TOWERS
Sheikh Zayed Road, Dubai
Jumeirah Emirates Towers is a sleek
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TAMANI HOTEL MARINA
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Saudi Arabia
JEDDAH HILTON
Jeddah
Located a 10-minute drive from the
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LAYIA OAK HOTEL & SUITES
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KEMPINSKI HOTEL MALL OF
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Sheikh Zayed Road, Dubai
The truly unique and exciting five stars
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ACACIA HOTEL
Ras al Khaimah
The Acacia Hotel is a superbly designed
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Tel 00971 7 2434421
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HOLIDAY INN RIYADH, IZDIHAR
Riyadh
The first 5 star Holiday Inn hotel in the
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Tel 00966 1 4505054
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MEDIA ROTANA DUBAI
Al Barsha South-TECOM
Located in the heart of Dubai’s new
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Dubai has 460 rooms, suites and deluxe
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PULLMAN DUBAI MALL OF
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Mall of the Emirates, Dubai
Discover a new attitude hotel directly linked
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Qatar
MÖVENPICK HOTEL DOHA
Doha
Located on the Corniche Road, opposite
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Jeddah
The hotel situated in the heart of the
business centre offers 211 rooms, 17
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rooms and 2 reception rooms to
accommodate up to 350 people.
Tel 00966 2 6602000
Fax 00966 2 6604145
 EXHIBITIONS & CONFERENCES

Qatar’s new exhibition centre

The Qatar National Convention Centre (QNCC), an iconic
building designed by Yamasaki Architects and RHWL, will be
the largest of its kind when opened in 2011. QNCC will cater
for regional and national conventions, exhibitions, galas,
concerts, weddings and banquets. The awe inspiring main
facade will resemble two intertwined trees. In keeping with its
organic design, QNCC is the first of its kind being build to the
gold certification of U.S. Green Building Council’s Leadership
in Energy and Environment Design (LEED).

The sprawling 177,000m2 centre development will cost around

$1.2bn on completion.

UNITED ARAB EMIRATES

Abu Dhabi
September 19-22 5th Annual Corrosion Mangement Smmit Le Royal Meridien iqpc.com
21-22 The Internet Show Middle East 2010 Abu Dhabi National Exhibition Centre terrapinn.com
22-25 ADIHEX - Abu Dhabi Int’l Hunting & Equestrian Exhibition Abu Dhabi National Exhibition Centre turretme.com
26-29 Vertical Transportation Middle East Radisson Blu Hotel Golf Plaza iqpc.com
Acoustics in Construction 2010 Le Royal Meridien iqpc.com
Dubai
September 19-22 2nd Annual Hotel Technology Middle East Amwaj Rotana iqpc.com
2nd Annual Process Safety Management Summit Amwaj Rotana iqpc.com
Telecom Fraud Prevention and Revenue Assurance The Movenpick Hoel Jumeirah Beach iqpc.com
26-27 Shopper Marketing Conference Hyatt Regency Hotel marcusevans.com
Retail Management Conference Hyatt Regency Hotel marcusevans.com
26-28 Gifts & Premium Dubai Dubai Int’l Convention & Exhibition Centre channelsexhibitions.com
Middle East Pool & Spa Exhibition Dubai Int’l Convention & Exhibition Centre reedexpo.com
Paper Arabia 2010 Dubai Int’l Convention & Exhibition Centre alfajer.net
Middle East Cleaning Exhibition – CLEAN 2010 Dubai Int’l Convention & Exhibition Centre reedexpo.com
26-29 Private Label Middle East Show 2010 Dubai Int’l Convention & Exhibition Centre channelsexhibitions.com
Sharjah
September 28-Oct 2 Watch & Jewellery Exhibition Expo Centre Sharjah expo-centre.ae
KUWAIT
September 23-Oct 2 Beauty & Wedding Expo 2010 Kuwait International Fairs kif.net
BAHRAIN
September 14-23 Al Ayam Cultural Fair Bahrain Int’l Exhibition & Convention Centre bahrainfair.com
27-29 Gulf VIP on Board Designs Bahrain Int’l Exhibition & Convention Centre bahrainxhibitions.com
OMAN
September 26-27 Urban drainage, sewerage & Irrigation Conference Intercontinental Hotel, Muscat marcusevans.com
Urban drainage, sewerage & irriigation Intercontinental Hotel, Muscat marcusevans.com
28-29 Oman Capital Markets Forum Al Bustan Palace Continental, Muscat omancapitalmarkets.com

September 2010 gulfbusiness 81

OUT TO LUNCH AJAZ SHEIKH

See and be seen

ALICIA BULLER dines with Ajaz Sheikh, director of Zuma’s Middle East operations,
and learns the secret of keeping tables busy day and night.

I
know who he is as soon as I see him. Ajaz Sheikh, Zuma’s Sheikh says he will also launch the company’s younger,
regional boss of operations, is slick and considered, just more informal sister chain, Roca, in Dubai. “We can’t
like his undulatingly cool restaurant chain. open another Zuma here as we don’t want to cannabilise
Decked out in an immaculate, well-cut suit, replete our market.”
with pocket hankie, he’s paid attention to the small stuff. It’s Sheikh’s unforgiving drive to keep the clients happy
Likewise, it’s the attention to details that ensures the high- that has catapulted the manager from the Mandarin
end Japanese brand continues to lure glitterati from across Oriental to the Lanesborough to Zuma.
the globe. As I bite into the restaurant’s
The DIFC-based restaurant famously tender and sweet black
launched two years ago, joining cod, I’m treated to a passionate
its sister outlets in London, and encyclopedic knowledge of
Hong Kong, Istanbul and Miami. what makes customers tick.
What do the four cities and It comes out like a stream of
Dubai have in common? A social consciousness: “It’s about the
set that likes to be noticed. “In experience, it starts with the
this city, people go out to be reservation, first impressions
seen,” says Shiekh. when you walk in, the valet,
“Zuma pulls in the how welcoming the hostess is,
aspirational people. Without how they read you. What kind
them, we’d be nothing. We offer of a client are you? Are you in
an exclusive feel, our customers business? Are you old or young?
want to mingle with the who’s Are you with kids or without
who of the city.” kids?” he says, barely pausing
Sheikh himself is no stranger for breath.
to the stars. Working at the Crucially, while the eatery is
Lanesborough in London, he home to the stars, one thing the
rubbed shoulders with some Zuma manager never forgets is
of the world’s most famous value for money.
people. “Michael Jackson was a “Don’t rip people off. People
lovely guy,” he says, with more are smart, don’t underestimate
nonchalance than most of us them. Read them, and offer the
could muster. drinks you’ll think they want.
While Sheikh regales me with I never want to hear from a
stories of celebs and the art customer that we’ve oversold,
of high-end hospitality, I set because that means they’ve lost
to work on an extraordinarily and I’ve lost,” he explains.
well-presented set of dishes. As “Something I learned in the
the flavours burst onto my palate, I’m particularly pleased Lanesborough is that rich people care about value for
with the seared tuna with chilli daikon and ponzu sauce; money. It’s the people like you and I who get the money
it’s fresh and striking. and blow it all at somewhere like Zuma,” he says.
One of Zuma’s Japanese concepts is to keep the food To keep the tables busy, Zuma offers a four-course
flowing to the table, mounds and mounds of gloriously lunch for AED120, and, as a result, the crowd is eclectic.
colourful food. Among the starters are the traditional For those that have money, or for those that don’t, there’s
edamame beans (fresh and crunchy) and salads, including something authentic about Zuma. It’s honest in what it’s
the house offering with asparagus, tomatoes and maple trying to achieve: a unique experience, attention to the
shichimi dressing. It’s inventive but simple; a difficult details, and that’s what Sheikh personifies.
balance to strike and one that Zuma does well. In a country where credit-card penetration is high and
The restaurant plans to open up in Abu Dhabi – “in service is notoriously uninspiring, the tables should stay
the city centre though, not those islands” – and Beirut. busy for sometime yet.

82 gulfbusiness September 2010

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