bloggingbuyouts

Dubai International Capital and Chinese private equity First Eastern Investment Group have announced a new joint fund, China Dubai Capital.

The fund will focus on China's growing economy in sectors such as infrastructure, health care, and resources and will attempt to capitalize on the growing ties between the UAE and China. Companies with strong growth possibilities and the potential to eventually trade on Dubai national securities markets will be primary recipients of the fund. The first closing of the fund will tag at least $500 million and will close this May. By the final closing expected in October, the fund is expected to reach $1 billion.

First Eastern currently manages over $1.5 billion for direct Chinese investments and is the first Chinese financial company to be established in the Dubai International Financial Center. Dubai International Capital manages Jordan Dubai Capital, a $300 million fund, and plans to launch a fund focused on Saudi Arabia.

$100 per barrel oil is increasing the face amounts of funds being committed. As high oil prices remain, expect more and more from Middle Eastern private equity and sovereign wealth funds to buy up infrastructure projects. That's the new world.
If you think this is a big deal for private equity or sovereign wealth funds, check out the Dubai $54 billion proposed eco-project.

When you read of a $54 billion project, the first thing that comes to mind are things the size of the Suez Canal, the Panama Canal, or the massive Three Gorges Dam in China.

As it turns out, it isn't. It's in Dubai, or is supposed to be. A massive eco-project in Dubai may be coming to fruition. A report out of Arabian Business is talking about an 82-square kilometer project that would border Downtown Burj Dubai to the north and Dubailand to the south. The project is called Mohammed bin Rashid Gardens, and is being developed by Dubai Properties, part of the state-owned conglomerate Dubai Holding.

Having just had family that returned from Dubai just last week, I thought they were nuts when they talked about a massive oasis that was miles after miles of green commercial, residential, tourist, and care centers being built on top of what is already being built in Dubai today.

While dates have not been given, I'd strongly encourage you to read about it and look at the flash demo of some of the plans to see the scope of this project. As if the building of Dubai into a super-city wasn't enough, and as if creating "The World" housing projects wasn't enough, this project seems like it would be larger than massive.

Whoever gets that water desalination pact to supply all the water for these kilometers after kilometers of green land in an otherwise extremely hot and arid desert is going to clean house.

If things continue at the pace they have, every millionaire and every billionaire in the world is going to have to have one office and two homes in the region to fill all of these new and planned structures up.

Egyptian buyout firm Citadel Capital may actually be coming public. A report out of DealBook from the New York Times discusses that the firm plans to raise $150 million to $200 million from a public offering later this year.

The firm currently manages $7 billion in assets and intends to use the capital for ventures in the energy, food and manufacturing industries.

This article also noted that according to managing director Mr. el-Houssieny, Citadel is in discussions with four undisclosed international banks regarding the offering. It also notes that it is looking into whether it should list in London, Cairo, or Dubai.

In 2007, the company purchased Rally Energy Corp, a Canadian oil company, for $849 million and was involved in the Egyptian Fertilizer Co.'s $1.41 billion sale.

This would be an interesting change of pace. Imagine a private equity and LBO firm in the U.S. announcing it would come public. They would be told to go away until next year. Now imagine if you were selling this only to Americans and it was an Egyptian company wanting to do this. Maybe the decoupling argument isn't as ludicrous as we think.

It's possible that Istithmar, the private-equity arm of the Dubai government, is grimacing today, after news of a higher bid for Jones Apparel Group Inc. (NYSE: JNY)'s Barneys New York unit surfaced. Under the terms of their agreement, Jones is allowed to weigh other offers for the Barneys unit until July 22 and can explore bids for the entire company through August 11. Jones said Thursday it received an unsolicited bid from Japanese clothing company Fast Retailing Co Ltd to acquire Barneys for $900 million. That's a 9% premium over Istithmar's $825 million offer.

Fast Retailing, which owns stores in more than 12 countries, says owning Barneys New York would increase its market diversification and boost its revenue. The company recently expanded its Uniqlo casual clothing into the U.S., and said last year it would target the U.S. retail market for acquisitions. Fast Retailing sees "potential top-line synergies" in buying Barneys.

For Jones, though, analysts believe the upscale unit has allowed Jones to "lessen its dependence on selling its wholesale lines to department stores." Should Jones decide to break up the in-place deal with Istithmar, it will have to pay Dubai a $20.6 million breakup fee, or $22.7 million if terminated after July 22. So far, however, the deal is still on the table.

Either way, a purchase of Barneys would show the increasing desire for upscale retail, and the increasing desire of companies from countries like Dubai and Japan to further expand into the U.S. market.

Don't feel too badly for Istithmar if their Barneys deal falls through. The firm also reportedly has interests in clothing retailer Loehmann's Holdings, various commercial buildings in New York and London, and investment bank Perella Weinberg Partners.