Dubai World in their hands
Interest is a murky business in Muslim finance, in which religious doctrine prohibits earning money from money loaned. And while bankers are largely upbeat about the deal being offered by Dubai to bail out Dubai World and its property unit Nakheel, relieved that they are getting anything at all, perhaps they will take some solace from the interest prohibition when they say a final goodbye to any interest they were due.
Dubai World is being recapitalized and Nakheel’s bonds are to be paid off – sans interest — with $9.5 billion of aid. The funds include about $4 billion from the government of Dubai and a previous loan of $5.7 billion from oil-rich neighbor Abu Dhabi. The plan is Dubai’s attempt to restructure some $26 billion in debt held by Dubai World, owner of the QE2 liner and Cirque du Soleil assets. Nakheel is the developer that conjured the emirate’s iconic global map made of islands.
Some investors were expecting Abu Dhabi to step in with more cash, but it is apparently done funding its neighbor’s excesses. Maybe next boom, they’ll be back.
DealZone Daily
The Dubai government unveiled plans to recapitalise its indebted Dubai World flagship and repay Nakheel bonds in full, injecting what it said was $9.5 billion in new funding, but without new aid from Abu Dhabi. Read the Reuters story here.
Bharti Airtel looked set to wrap up its $9 billion deal to buy most of Kuwaiti telecom group Zain’s African assets, giving India’s top mobile operator a foothold in the frontier market after two failed attempts to buy South Africa’s MTN. Read the Reuters story here.
For more on these and the rest of the latest deal-related news from Reuters, click here.
In M&A and corporate finance news reported by other media on Wednesday:
German carmaker Daimler AG and France’s Renault are close to deciding on a wide-ranging strategic partnership that would include a swap of small equity stakes, the Financial Times said, citing unnamed sources close to the situation.
Adelson splashes the pot in Asia
Sands China’s weak debut in Hong Kong - a first-day drop of 10 percent – was the fourth-worst launch on that market this year, but came as little shock to analysts who were betting against the Asian gambling play. Rival Wynn Macau is down 5 percent since listing in October.
Sands China’s $2.5 billion IPO wasn’t helped by the default tremors kicked off by Dubai, which has helped to expose a whole new area of risky bets in emerging markets.
“The fever for casino stocks is seen to be over now,” said Patrick Yiu, a director at CASH Asset Management. “Investors are worrying about the industry outlook, especially keen competition, when more casinos are ready for business.”
“We’re not in this for a day’s trading, we’re in it for the long term,” Las Vegas Sands CEO Sheldon Adelson said.
So is this a time to hold ‘em, fold ‘em, walk away or run? Adelson clearly is not counting his money while sitting at the table, and there will be many who argue that betting against the Chinese appetite for gambling never made anyone rich. More likely, fund managers will look for more attractive price points to place their bets, while Sands plays with house money.
DealZone Daily
Auto maker General Motors is grappling with the future of its European units Saab and Opel after one sale collapsed and the other was pulled, targeting the bulk of its 9,000 job cuts at Opel’s German factories.
Bookseller Borders UK called in the administrators yesterday, adding its name to a growing list of failed British high street retailers. Administrator MCR is hoping to sell the business, bought by Valco (the private equity arm of turnaround specialist Hilco) in July this year, as a going concern.
Lachlan Murdoch, son of News Corp chief executive Rupert Murdoch, sold some $27.6 million of his shares in his father’s company as he bought 50 percent of Daily Mail & General Trust’s radio operations in Australia.
For the latest deals news from Reuters, click here.
And here’s the top stories from elsewhere (some external links may require subscription):
Concerns over Dubai World’s debt dominated the news as stocks around the world tumbled and markets struggled to get to grips with the extent of the problem in the absence of solid information, says the Financial Times.
Siemens AG’s hearing aids business, valued at up to 3 billion euros, is drawing interest from private equity firms including KKR and BC Partners, Bloomberg writes.
Nasdaq powers Iraqi stock exchange’s electronic trading
Talk about trying to get a piece of an emerging market.
Nasdaq OMX said on Tuesday that its trading and clearing system was used in the launch last week of electronic trading on the Iraq Stock Exchange, or ISX, as it is known.
It is not the first time U.S. exchanges have partnered with counterparts in the Middle East. Nasdaq operates Nasdaq Dubai, and last year, the New York Stock Exchange bought a 25 percent stake in Doha Securities Market. But it may well be the first time an exchange struck a deal in a war torn country, another sign that Iraq may slowly be returning to a semblance of normalcy.
With 3,800 listed stocks, Nasdaq is well positioned to help out ISX, an embryonic exchange started in 2004 that lists only 91 stocks. About half of those are finance-related companies, such as Bank of Baghdad and Babylon Bank, while others include hotels and agricultural companies. Please click here to see the list.
Only five stocks are available for electronic trading for now, but a start is a start, and other stocks will follow in the coming months, ISX and Nasdaq said.
In any way you take it or name it, all is Interest Tradings. Money earned through any means by the local Shaikhs, their friends and rich are mostly invested abroad. All know this but is this investment abroad on Islamic Principles? Do we have any Christian Way of Investment, if so kindly educate us all so that we may also follow. What if Hindus or some other believers also start propagating their followers to start investing in their own method of investment. I think to drag religion in all systems in life is not good even for them.