Dubai: Suddenly the World is Listening

Posted by: Stanley Reed on March 07

Dubai International Capital (DIC) issued an interesting statement on March 6. The fund, which is owned by Dubai’s ruler, said it had not been approached by Citigroup seeking funds and that it “had not been privy to any non-public information” about the bank, Reuters reports.

The statement seems to have been an effort to put an end to the controversy created by DIC’s boss, Sameer Al Ansari, two days before. On March 4 Al Ansari rippled world markets when he told a Dubai investment conference that, in his opinion, it would take “a lot more money” to rescue Citigroup and some other financial institutions. Citi has already raised about $30 billion from Abu Dhabi, Kuwait, and Saudi Arabia’s Prince Al Waleed. The comment seemed like an off-the-cuff remark to those in the room, but, picked up on the newswires, it sent shivers through world markets and helped pound Citi’s stock.

What investors appear not to have realized is that not all the Gulf funds are equal. Unlike the Abu Dhabi Investment Authority, whose assets are estimated at several hundred billion dollars, DIC is a relatively small outfit managing perhaps $13 billion, including assets purchased with borrowed money. It specializes in mid-size buyouts of European companies. While it does have stakes in HSBC and European planemaker EADS, DIC is not the sort of fund that a major bank such as Citi is likely to turn to for help in a crisis. But for global investors, a gulf fund manager talking about there likely being more problems down the road for Citi was scary stuff. It is assumed that such executives are now besieged by western bankers seeking capital.

Al Ansari, in fact, is torn about whether DIC is a sovereign wealth fund at all. It is owned by Dubai’s ruler, who is at least formally not its government. In the same talk in which he stirred up doubt about Citi Al Ansari also acknowledged that DIC was likely to be treated like an SWF whether he liked it or not.

Until recently Gulf moneymen such as Al Ansari were of little interest to the rest of the world. Al Ansari, for instance, was an accountant and then a CFO of a public sector company in Dubai before he set up DIC in 2004. Now he finds himself in the world spotlight, not just over his remarks about Citi but concerning his efforts to buy Liverpool, one of Britain's most cherished football clubs. The British press is following his on-off negotiations with American buyout specialist Tom Hicks, who owns 50% of the club, very closely. Al Ansari is learning on the job that his words now have a lot more impact than they used to have.