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.

The New York Times [registration] reports that the Carlyle Group and the NASDAQ Stock Market, Inc. (NASDAQ: NDAQ) are selling out to one of the countries -- United Arab Emirates -- from which two 9/11 hijackers -- Marwan al-Shehhi and Fayez Benihammad -- hailed.

Specifically, the government of Abu Dhabi, United Arab Emirates' capital, will buy 20% of Carlyle Group, valuing it at $20 billion. While yesterday, NASDAQ announced that is was selling 19.9% of itself to Borse Dubai, the Dubai government-controlled exchange.

But not a peep of protest is emerging from the White House. And why should it protest? This is the decade where it's better to be a barrel of oil -- or a country that sits on oil -- than to be an American. After all, the price of oil is up 242% to a record $82 a barrel since its January 2001 price of $24 a barrel. Meanwhile, since 2001, the median family income adjusted for inflation has stagnated. Bernanke's bailout has slashed the dollar to record low levels against the euro -- and since oil is traded in dollars -- that means people who drive will be paying more than ever.

Fortunately, in the case of NASDAQ, there is some rising anger in Congress akin to the successful effort to stop the sale of a company that managed U.S. port operations to a Dubai-controlled company. The administration's drive to sell our infrastructure to the enemy seems more consistent with its War on the American Middle Class than its so-called War on Terror.

I'm not surprised that Carlyle would sell out to the enemy since its senior advisers are so deeply embedded in the oil industry. But selling the stock exchange that takes technology companies public points another dagger at our economic jugular.

Peter Cohan is president of Peter S. Cohan & Associates,. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in NASDAQ.

Blackstone Group (NYSE: BX), a global alternative asset manager and provider of financial advisory services, closed at $25.95 Thursday. BX priced 133.33 million shares at $31 on 6/21. BX traded at its record high of $38 on its first day of trading on 6/22. The Carlyle Group LP, a global alternative asset manager, sold a 7.5% stake to an investment arm of the Abu Dhabi government for $1.35 billion, indicating Carlyle might be institutionalizing in an attempt to reach out to public investors. BX October option implied volatility of 39 is below its 10-week average of 45 according to Track Data, suggesting decreasing risk.

Fortress Investment (NYSE: FIG), a global alternative asset manager with approximately $43.3 billion in assets under management, closed at $20.67 Thursday. FIG will pay a cash dividend of $0.225 per class A share for the quarter ending 9/30/07. FIG October option implied volatility of 55 is above its 26-week average of 49 according to Track Data, suggesting larger risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.