Sunday, June 13, 2010

Dubai Holding Dissolves DIC Board and Takes Direct Control



GulfNews reports that Dubai Holding announced that it had dissolved the Board at DIC and taken direct control over the Company.  The cover story is that this was done to "implement a new (corporate) governance structure".

I suspect that as well it reflects a new corporate strategy.  Given the less than sterling performance of DIC and much more limited resources available to Dubai going forward, the Emirate has probably wisely decided to slowly unwind DIC.  That grandiose dreams of an international empire will have to be shelved in favor of making sure the economy back home is taken care of.  

The first step on the new path will be trying to get creditors to extend maturities until markets improve and assets can be sold.  Then triage on the existing portfolio.  Letting those entities that cannot be saved go.  And focusing limited cash on retaining control of and building value in those that have potential for a price rebound.

No longer on the Board of DIC, Samir AlAnsari will have a new role at Shuaa Capital.  Instead of building an empire through acquisition, he'll be tasked with building a business the old fashioned way - disciplined growth.

4 comments:

the real nick said...

Disciplined growth? And what does he know about that, given his track record...if I were an investor in Shuaa I'd sell up now.

Btw. I love how this apparently happened back in January and only now became public. That old chestnut of dropping bad news during summer break?

Abu 'Arqala said...

TRN

It's pretty clear that you don't have the Vision.

I think the time to sell would have been around (a) the Kuwaiti transaction or (b) the AED 1.5 billion camel.

3li said...

Id imagine that whatever good assets in the portofolio were sold off far before the board being dissolves...

Bailing a sinking ship in that respect.

Abu 'Arqala said...

Ali

Thanks.

I suspect they may have held on to some in the hopes that the market price will come back. I think DIC's problem is a familiar one - buying assets at the top of the market with too much leverage.