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In the wake of Dubai’s emergence as one of the world’s fastest-growing cities, characterized by a booming property market since the global financial crisis, the Emirate is now looking to capitalize on its economic momentum. Fueled by Russian demand and a resilient recovery from the pandemic, facilitated by eased residency rules, Dubai seeks to harness its financial strength through a new investment vehicle.
The newly announced fund will encompass shares in key state-owned enterprises, including the Dubai Electricity and Water Authority, toll-road operator Salik, and Dubai Taxi, among others, according to the Dubai Media Office. The fund’s mandate extends to managing government funds, surpluses, and general reserves, with a primary focus on investments in stocks and bonds. Notably, it aims to explore opportunities in both the domestic and foreign markets.
“Dubai is on a much stronger fiscal footing,” asserted Tarek Fadlallah, the CEO of Nomura Asset Management in the Middle East. This move aligns with the broader trend in the Gulf region, where sovereign wealth funds are redirecting proceeds from higher oil prices to diversify their economies away from hydrocarbons.
Saudi Arabia and the United Arab Emirates, at the forefront of this economic shift, are not only focusing on domestic investments but are also venturing into global deals through state-backed entities. This strategy seeks to transform domestic companies into regional and global players, contributing to the long-term sustainability of their economies.
While details on how the new fund will differ from Dubai’s existing sovereign wealth fund, the Investment Corporation of Dubai (ICD), remain unclear, the latter has been a key player in Dubai’s economic landscape since its establishment in 2006. The ICD owns significant stakes in various companies, ranging from the Emirates airline to financial institutions like Emirates NBD and prominent real estate firm Emaar Properties.
The newly formed fund will be chaired by Sheikh Maktoum bin Mohammed bin Rashid al-Maktoum, the deputy ruler of Dubai and the finance minister of the UAE. Sheikh Maktoum, instrumental in overseeing the sale of stakes in companies such as DEWA and Salik, brings a wealth of experience to guide the fund’s strategic direction.
As Dubai embarks on this financial diversification journey, the affiliation of state-owned conglomerate Dubai World with the new fund signifies a collaborative approach without compromising the legal autonomy of the entities involved. The recent success of DEWA’s $6.1 billion initial public offering, led under Sheikh Maktoum’s oversight, underscores the potential economic benefits that this new fund could unlock for Dubai’s financial landscape.