Dubai Buys Deutsche Bank Stake Valued at $1.8 Billion
Dubai's government bought a stake in Deutsche Bank AG, Germany's biggest bank, worth about $1.8 billion as part of a plan to diversify its sources of income and raise the Persian Gulf emirate's international profile.
The state-run Dubai International Financial Centre, or DIFC, bought 2.2 percent of Deutsche Bank to benefit from its ``solid, sustainable growth strategy,'' Omar bin Sulaiman, the center's governor, said today in an e-mailed statement.
``This looks like part of the trend of Dubai Inc. buying into Western companies regarded as sources of excellence,'' said Philip Khoury, head of research for EFG-Hermes Holdings SAE, Egypt's biggest investment bank. ``We don't know whether the DIFC will get a board seat enabling it to influence Deutsche but the deal does help put Dubai on the map.''
Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum has been luring international companies to the Gulf as his oil wells start to run dry by offering them a tax-free base from which to tap regional oil wealth. Using money earned from real estate, tourism and state companies, the government last year bought Peninsular & Oriental Steam Navigation Co. for $6.8 billion.
Dubai International Capital LLC, a private equity company owned by Sheikh Mohammed, said on May 1 that it had acquired a ``substantial'' stake in HSBC Holdings Plc after the London-based lender's shares declined by 8.4 percent in six months. Dubai's state-owned Istithmar PJSC last year said it paid about $1 billion for 2.7 percent of Standard Chartered Plc.
Record Earnings
Deutsche Bank last week reported first-quarter profit jumped 30 percent on record earnings from its securities unit, Europe's biggest by revenue. Earnings beat analysts' expectations for the 11th consecutive quarter.
The shares have risen 14 percent in the past six months, valuing Deutsche Bank at 60.7 billion euros. The stock trades at 8.3 times earnings per share compared with the 11.3 average ratio of its nine main competitors, including New York-based Goldman Sachs Group Inc., the biggest investment bank, and UBS AG, the largest money manager for the wealthy.
``If you are bullish on capital markets and are looking for a leader that is plugged into global trends, then Deutsche is a good choice,'' said Jon Peace, an analyst at Fox-Pitt Kelton Ltd. in London, who has an ``in-line'' rating on the stock.
Real Estate
The DIFC is a 110-acre site in central Dubai designed to attract foreign financial institutions to the Gulf emirate. Since opening in 2004, it started its own stock, bond, fund and derivatives exchange and sold land and offices housing banks including Deutsche, Goldman Sachs, HSBC and Citigroup Inc.
Deutsche Bank is among the member banks of the center's Dubai International Financial Exchange. In May, the center tripled its holding in Euronext NV, Europe's second-largest stock exchange, to 3.48 percent.
Nasser al-Shaali, the DIFC's chief executive officer, in March said the center's investment unit plans to spend $2 billion this year on overseas ``investments that can benefit the financial services industry in our region.''
While Bin Sulaiman and al-Shaali could not be reached for comment on their mobile phones, Deutsche Bank spokesman Alfredo Flores said, ``We are pleased to have attracted this important shareholder.''
UBS holds a 3.12 percent stake in Deutsche Bank and Barclays Plc owns 3.1 percent, according to Deutsche Bank's Web site. Deutsche shares slipped 0.8 percent to 115.56 euros in Frankfurt. Source
The state-run Dubai International Financial Centre, or DIFC, bought 2.2 percent of Deutsche Bank to benefit from its ``solid, sustainable growth strategy,'' Omar bin Sulaiman, the center's governor, said today in an e-mailed statement.
``This looks like part of the trend of Dubai Inc. buying into Western companies regarded as sources of excellence,'' said Philip Khoury, head of research for EFG-Hermes Holdings SAE, Egypt's biggest investment bank. ``We don't know whether the DIFC will get a board seat enabling it to influence Deutsche but the deal does help put Dubai on the map.''
Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum has been luring international companies to the Gulf as his oil wells start to run dry by offering them a tax-free base from which to tap regional oil wealth. Using money earned from real estate, tourism and state companies, the government last year bought Peninsular & Oriental Steam Navigation Co. for $6.8 billion.
Dubai International Capital LLC, a private equity company owned by Sheikh Mohammed, said on May 1 that it had acquired a ``substantial'' stake in HSBC Holdings Plc after the London-based lender's shares declined by 8.4 percent in six months. Dubai's state-owned Istithmar PJSC last year said it paid about $1 billion for 2.7 percent of Standard Chartered Plc.
Record Earnings
Deutsche Bank last week reported first-quarter profit jumped 30 percent on record earnings from its securities unit, Europe's biggest by revenue. Earnings beat analysts' expectations for the 11th consecutive quarter.
The shares have risen 14 percent in the past six months, valuing Deutsche Bank at 60.7 billion euros. The stock trades at 8.3 times earnings per share compared with the 11.3 average ratio of its nine main competitors, including New York-based Goldman Sachs Group Inc., the biggest investment bank, and UBS AG, the largest money manager for the wealthy.
``If you are bullish on capital markets and are looking for a leader that is plugged into global trends, then Deutsche is a good choice,'' said Jon Peace, an analyst at Fox-Pitt Kelton Ltd. in London, who has an ``in-line'' rating on the stock.
Real Estate
The DIFC is a 110-acre site in central Dubai designed to attract foreign financial institutions to the Gulf emirate. Since opening in 2004, it started its own stock, bond, fund and derivatives exchange and sold land and offices housing banks including Deutsche, Goldman Sachs, HSBC and Citigroup Inc.
Deutsche Bank is among the member banks of the center's Dubai International Financial Exchange. In May, the center tripled its holding in Euronext NV, Europe's second-largest stock exchange, to 3.48 percent.
Nasser al-Shaali, the DIFC's chief executive officer, in March said the center's investment unit plans to spend $2 billion this year on overseas ``investments that can benefit the financial services industry in our region.''
While Bin Sulaiman and al-Shaali could not be reached for comment on their mobile phones, Deutsche Bank spokesman Alfredo Flores said, ``We are pleased to have attracted this important shareholder.''
UBS holds a 3.12 percent stake in Deutsche Bank and Barclays Plc owns 3.1 percent, according to Deutsche Bank's Web site. Deutsche shares slipped 0.8 percent to 115.56 euros in Frankfurt. Source
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