Dubai sets up fund to oversee government investments

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Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai has issued a law to establish the Dubai Investment Fund, “an independent public entity” to drive investments in strategically important projects on behalf of the government, according to Dubai Media Office.

The newly established fund will hold stakes in entities including utility giant DEWA, toll operator Salik and Dubai Taxi Company – which were privatised over the past years.

Dubai World, whose holdings include DP World, will be affiliated with the new fund but it will preserve its “legal identity.”

The sovereign fund invests government funds, surpluses and the general reserve locally and internationally. It will also have the power to establish companies and investment funds, as well as buy or merge firms.

The Dubai Investment Fund will be chaired by Sheikh Maktoum bin Mohammed bin Rashid al-Maktoum, Deputy Ruler of Dubai and the UAE’s finance minister. Abdulrahman Saleh Al Saleh has been appointed as vice chairman of the board while Abdulaziz Mohammed Al Mulla is the managing director and CEO of the fund.

The fund is also tasked with bolstering the financial stability of the emirate by financing the government’s deficit and establishing strong financial reserves to promote the emirates’ long-term financial sustainability.

It will focus on investments in stocks, bonds, and securities to achieve sustainable returns while exploring prospects in local or international financial markets.

Furthermore, it can deal in movable and immovable assets, manage funds, provide mortgages and guarantees, besides participating in the financial derivatives business.

Dubai’s new wealth fund

Dubai already has a sovereign fund, the $320bn Investment Corporation of Dubai (ICD), which is the principal investment arm of the government and has holdings in Emirates Group and Emirates NBD, Emaar Properties and Emirates National Oil Company.

ICD reported a more than 91 per cent surge in half-year profit, driven by growth across all business segments amid strong economic momentum in the UAE. The wealth fund’s banking and transportation divisions’ respective contributions to the wealth fund’s profit soared by Dhs8.2bn and Dhs7.7bn.

The state investor’s revenues reached a record Dhs145.1bn, up 20 per cent with an increase of Dhs24bn compared to the prior year period while assets soared by 6.5 per cent to reach a record Dhs1.3tn, primarily driven by the growth of banking assets.

Meanwhile, Kuwait reportedly plans to establish a new wealth fund to develop the Gulf state’s local economy, spearhead mega projects, and attract funds from foreign investors and the private sector.

Read: How GCC wealth funds are fuelling growth and prosperity