Dubai and South Korean sovereign wealth funds in landmark cooperation deal

The deal is thought to be the first time two sovereign wealth funds from different countries have signed a strategic deal to cooperate on global investments, rather than just working together on individual projects.

Investment Corporation of Dubai (ICD), the government investment group, has struck a landmark deal with the sovereign wealth fund of South Korea to cooperate on financial opportunities around the world.

The deal – signed in Dubai – involves ICD and Korea Investment Corporation (KIC) developing a platform that “facilitates communication between the two organisations, while empowering them to jointly explore investment opportunities in the UAE, South Korea and other countries”, ICD said.

ICD holds valuable stakes in assets such as Emirates Airline, Emirates NBD, and the Dubai Electricity and Water Authority. It has assets valued at US$160 billion, according to a bond prospectus issued last year.

KIC oversees the investments of the South Korean government, which span diverse industries in global markets. Total assets are estimated at $72bn.

It is thought to be the first time two sovereign wealth funds from different countries have signed a strategic deal to cooperate on global investments, rather than just working together on individual projects.

“International cooperation agreements and partnerships play a central role in expanding our market presence and expertise locally and abroad,” said Mohammed Al Shaibani, the chief executive of ICD.

“We look forward to collaborating with KIC to further strengthen the well-established commercial ties between Dubai and South Korea.”

Hank Ahn, chief executive of KIC, added: “Dubai is a growing commercial and financial hub as well as an important gateway to emerging markets.

“We look forward to exchanging information and jointly finding new investment opportunities alongside such a solid partner.”

The UAE and South Korea have collaborated on a number of high-profile deals in recent years. Last month Seoul media reported that ICD had taken a controlling stake in Ssangyong Engineering & Construction, a building firm that has recently experienced financial difficulties. The price of the stake was about Dh667 million, according to reports.

Ssangyong has a long history of construction contracts in the Middle East, notably the Hadeed iron and steel mill and Jubail desalination plant, both in Saudi Arabia.

In September 2012 Ssangyong secured a deal to build a water treatment plant and transmission and storage facilities in northern Iraq.

In 2013 the Dubai-listed construction group Arabtec signed a joint venture with Samsung Engineering, part of South Korea’s biggest conglomerate, to bid for high-value contracts in infrastructure and refinery projects around the world, although no deals have yet materialised from the venture.

Arabtec also linked up with another South Korean company, GS Engineering and Construction, to build rail and other transport projects in the Middle East and elsewhere.

The move by ICD is a sign of the increasing trade flows between east Asia and the Middle East.

This week it was announced that South Korea and Saudi Arabia would cooperate on the development and construction of two small to medium nuclear power plants in the kingdom at a cost of nearly $2bn.

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