Investment manager

Dubai-based investment manager grows despite recession

Despite the turmoil in the global economy, the Dubai Investment Fund (DIF) delivered an outstanding performance for the 2021 financial year. The global investment firm manages a portfolio worth $320 billion on behalf of over 7,300 customers located in 61 different countries. The company’s head office is located in Dubai and is present in 17 countries. By expanding its holdings in various markets across a wide range of locations, DIF has outperformed other large private equity firms operating in the Middle East.

According to Amir Shams, Managing Director of DIF, “We are aware of global headwinds such as rising inflation, supply chain disruptions, rate hikes by central banks and rising cost of borrowing for companies”. These challenges present us with an opportunity to invest in companies that produce sustainable growth as we see it. DIF is continuing its efforts to diversify into other areas that provide long-term value. We also expect revenue to increase in the coming quarters due to the impending public offerings of some of our most important investments.

Although there is widespread concern that the economy is entering a recession, the company announced that it had had its most successful financial year to date. Operating profit increased to AED14.3 billion, or $3.8 billion (a 26.83% year-on-year gain), while total revenue increased to 180 AED .7 billion, or $308.9 billion (a 4.25% year-on-year return) . The company’s total assets are currently valued at AED1,184.6 billion ($322.9 billion) and its total capital is currently valued at AED878.1 billion ($239.1 billion) .

DIF was created in 2001 when the general economic climate was no different than it is today. The company was able to capitalize on growing international investor interest in the UAE and move quickly to establish itself as a player in the expanding hydrocarbon industry. The board appointed Amir Shams as managing director in 2002. Under his leadership, the fund’s portfolio has grown to include 27 major investments and 37 global partnerships. When he was investing at the height of the recession, he favored diversification. It was brilliant because it allowed the company to reap the benefits of rising valuations of emerging tech companies and steady dividends from its hydrocarbon investments. Its investment approach continues to be based on diversification, which has helped DIF become one of the most diversified companies in the GCC region.

Amir Shams and the company’s financial analysts saw a great opportunity to invest in oil in 2002, just after the price of oil fell from $29 to $18 in 2001. This realization was based on an analysis the aftermath of the 1998 Asian financial crisis, which saw oil prices plunge below $10 a barrel. The company made the decision to invest at that time. He did this by buying shares in Statoil, a Norwegian oil company founded in 1972, and Petrobras, a state-owned Brazilian multinational oil company headquartered in Rio de Janeiro. And there is no doubt that it was the best option. Since 2002, crude oil prices have risen almost continuously, causing the stock value of Statoil and Petrobras to rise.

In 2003, Mohammed Al-Rashid was hired by the company to serve as the fund’s chief investment officer (CIO), which helped consolidate each asset class under a dedicated portfolio manager. To develop a comprehensive long-term investment plan, he brought together a core group of twenty experts in their respective fields.

Mohammed Al-Rashid caught the attention of the company’s management on the emerging market for alternative energy resources. It was decided to test some initial investments in companies focused on renewable energy. As a direct result, DIF invested money in Energiekontor AG and Dongfang Electric in 2003. After the completion of the audit, it was decided to commit at least one percent of DIF’s investment portfolio to the acquisition of shares in the companies mentioned above.

In mid-2003, shares of Energikontor AG were bought for less than 2 euros per share, and shares of Dongfang Electric were bought for around 0.5 Hong Kong dollars per share. These investments undeniably deserve the title of great success. Some of these shares were sold at the beginning of 2008 at a price of more than 5 euros and more than 30 HKD, respectively. This translated into a profit for DIF that was several times greater than that of the investments.

In addition, investments were made in SunTech Power Holdings and SolarFun Power Holdings in 2005-2006. Another promising early-stage investment was made in 2010 in JinkoSolar, which is currently the largest solar panel manufacturer in the world. The DIF has so far retained ownership of some of these shares. The current price of these items is almost four times higher than the initial investment.

By 2022, the firm had grown to have a total of 2,600 employees, of which 920 were investment specialists with an average of 17 years of industry experience. The Company has interests in various markets, including but not limited to real estate, energy, infrastructure, commodities, industrials, technology, healthcare and financial markets. Each vertical is subdivided into specialist companies across the Middle East and Europe. In recent years, the fund has made some of its largest investments in alternative energy and finance, emerging technologies and fintech. The vast building stock owned by DIF includes residential and commercial structures and facilities dedicated to AI research and data storage.

As many real estate projects near completion, DIF seeks to reinvest in next-generation assets in emerging and developing economies. In addition, the company is further expanding its holdings in the financial sector. In recent years, DIF has acquired stakes in financial companies specializing in the equity, debt, currency and commodity markets on all the main stock exchanges in Europe and Asia. This is expected to increase the fund’s penetration in European and Asian markets. Additionally, it will provide investors with flexible investment opportunities and easy exit access.

The organization is dedicated to the process of developing infrastructure for sustainable energy. It plans significant investments in environmentally friendly energy projects in Europe, the Middle East, Africa and Southeast Asia by 2030. The company has tentative plans to liquidate some mature investments through the through secondary buyouts, initial public offerings (IPOs) and dividend recapitalizations. This can potentially drive the company’s earnings to new highs in the coming quarters.