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Dubai's DIFC plans $2bn acquisitions

The Dubai International Financial Centre (DIFC), a major regional offshore financial services hub, said on Sunday it planned to spend more than $2 billion on acquisitions this year, including a stake in a Western European financial services company.

The DIFC, which last year bought a 3.48% stake in European stock market operator Euronext, will likely conclude at least one acquisition before July, Nasser al-Shaali, chief executive of the DIFC Authority, said.
"Euronext was a taster if you will. There will be others coming along," Shaali told the Reuters Middle East investment summit. Asked in a Reuters Television interview how much would be spent on acquisitions in 2007, he
said: "In excess of $2 billion."

The acquisitions will include taking a stake in a financial information company and a financial services company, Shaali said. He declined to be more specific or say whether the firms are listed, but said their combined value was around $1 billion.

Most of the DIFC's budget would be spent on Western European purchases, with another acquisition planned in the Middle East, North Africa region, he said.

"The strategy behind the acquisitions for the DIFC revolves around investments that are going to catalyse the development of financial services in the region," Shaali said.

DIFC Investments, the DIFC unit that owns the Euronext stake, was considering buying stakes in about 14 firms in the financial services sector, Omar bin Sulaiman, governor of state-owned DIFC, said in July.

Gulf Arab investors have spent around $94 billion on foreign mergers and acquisitions since 1997, about two-thirds of that in 2005 and 2006.

Euronext is helping the DIFC develop a derivatives platform and an alternative listings platform for its stock exchange, the Dubai International Financial Exchange, Shaali said.

"There are many gaps in the financial services sector. From infrastructure to content aggregation, data dissemination, inter-dealer broking," Shaali said.

"All of these pieces are in short supply in our region. These areas are... low-hanging fruit to make some strategic acquisitions."

The DIFC is also in talks with Indian authorities about helping set up a financial district in Bombay, Shaali said, adding that discussions were at a "very early" stage.

Since DIFC opened in 2004, many of the world's leading financial institutions including Morgan Stanley, Merrill Lynch and Credit Suisse have received licences to offer financial services as they seek to tap Middle East oil wealth.

Some 350 companies, including about 116 financial services firms, are based in the dollar-based offshore investment zone in the Gulf Arab region's commercial hub.

Dubai plans to achieve economic growth of 11% per year to 2015 largely through encouraging financial services, the Gulf emirate's ruler, Sheikh Mohammed bin Rashid al-Maktoum, said in February.

The contribution of financial services to Dubai's GDP will more than quadruple to $15 billion by 2015, up from $3.4 billion now, bin Sulaiman said in February.

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