DUBAI: Debt-laden Dubai is looking into a possible privatization of public sector firms and offloading international assets, but is waiting for the right time for a good return, officials said Sunday.
"We continue to work to diversify our financing sources and broaden the space for participation in the wealth of our economy," said Sheikh Ahmed bin Saeed Al-Maktoum, the head of Dubai’s Supreme Fiscal Committee.
"We (continue to) work on opening the door for public subscription in some of our large companies," he added in a meeting with the media titled "Dubai economic update forum."
His comments came on the first anniversary of Dubai’s debt crisis, when the once-booming Gulf emirate sent jitters across global markets by demanding a standstill in payments on the debt of its largest conglomerate, Dubai World.
The group has since reached a deal to restructure about 24.9 billion dollars, with banks agreeing to reschedule around 14.4 billion dollars of debts over five and eight years. The deal averted a distress sale of foreign assets.
"According to the Dubai World plan, there is a possibility of selling some assets," said Mohammed Al-Shaibani, the director of the Dubai Ruler’s Court.
"All this going to be reviewed by the time we are ready to do so," said the man who has emerged as a key figure in Dubai’s team to sort out its debt.
"Dubai is very rich in assets; very good quality assets. We have been chased by so many friends, bankers and investment bankers to really do something with these assets. This is in the pipeline. We are evaluating it.
"This might be used as a mechanism in reducing some of our debts in the future," Shaibani added.
Assets held by Dubai World, and also Dubai Holding, the troubled group owned by Dubai’s ruler Sheikh Mohammad bin Rashed Al-Maktoum, were initially acquired as an investment, and their sale was always a possibility.
"Most of these assets were bought to be sold… Definitely, some assets will be put on sale when… they give us the right return," Shaibani said.
"Yes. We are very much reluctant to sell assets at this time, for not realizing the real value. That’s why I am asking our partners to give me time."
Dubai World has a portfolio of some 200 companies, including a stake in Barney’s New York luxury department stores, as well as Atlantis, the Palm hotel in Dubai, in addition to owning DP World, the world’s fourth largest container port operator.
Estimates vary of Dubai’s total debt, including that of government-linked firms, but most say they are worth more than 100 billion dollars.
Shaibani said such valuations were "inaccurate", adding Dubai’s sovereign debt amounted to 30 billion dollars.
"Debt owned by (government) corporations is considered operational," he said.
Shaibani agreed the privatization of government firms was on the cards.
"There might be a privatization plan. We are working on this with the government," he said, describing the government’s public sector as "strategic".
"We will be evaluating whether we sell part of it, privatize it, take it to the public market. This is an ongoing process.
"I don’t want to confuse what we have here in Dubai with what we own internationally," he warned, apparently implying that foreign assets would go first.
Dubai’s large portfolio of government entities includes the very profitable Emirates Airline, as well as utilities and other assets.
Asked whether Emirates was headed to privatization, Shaibani said such a move would not make sense at the moment as the company is bringing a good revenue.
"In any company with similar growth to that of Emirates, (share) offering would not be beneficial, because there is growth," he said.
"But is it on the list of firms (that could be privatized)? Yes, it is," he added.
The debt crisis had exacerbated Dubai’s economic woes as its real estate sector deteriorated after international finance dried up. Dubai property sale prices are estimated to have more than halved in value since peaking in 2008.
Dubai had managed to deal with the debt crisis thanks to a 20-billion-dollar lifeline from the Abu Dhabi-based central bank and Abu Dhabi government. But Dubai officials sounded upbeat about the prospects of the emirate’s economy saying it will not need further help.
"No. We will not need help from the (UAE) government," said Ahmed Humaid Al-Tayer, the governor of the Dubai International Financial Centre, at the press conference.
The Dubai statistics centre said last month it expected GDP to grow by 2.3 percent this year, way above a 0.5 percent growth forecast by the International Monetary Fund, which had said GDP contracted by 1.3 percent in 2009.
The growth is propped by a healthy recovery in trade, logistics and tourism.
