Dubai Group, the investment vehicle of the emirate's ruler, has opted out of a capital-raising exercise by a Malaysian bank that would have required a US$62 million (Dh227.7m) commitment. The Dubai Holding unit, which has a 40 per cent stake in Bank Islam Malaysia, said it would instead focus more on its home region. "Following the reassessment of its investment strategy, Dubai Group has redirected its competitive advantage closer to home, namely the GCC and greater Middle East regions," Dubai Group said in a statement. "Malaysia does remain a key market for future investments."
The decision by Dubai Holding - which is owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai - not to participate in the capital rights issue is the latest sign that tight purse strings are forcing Dubai Government-owned companies to concentrate on ongoing operations while reducing overseas investments. The group said it was "in the process of reviewing its strategic options relating to its stake" in Sharia-compliant Bank Islam.
It is unclear whether Dubai Group will keep its investment in the future and a spokeswoman declined to comment. The Dubai company was responding to an earlier announcement from Bank Islam that revealed Dubai Group had not subscribed for its preference shares. In April, the bank had offered its three shareholders the option to participate in plans to raise an overall 540 million Malaysian ringgit (Dh572.6m) to boost its capital.
The bank said in a statement that Dubai Group "has not taken up the offer to subscribe to its portion of [the shares] by September 30, 2009 amounting to 216m ringgit." The Malaysian bank will now offer the stake to its other two shareholders, BIMB Holdings and Lembaga Tabung Haji. Dubai Holding is currently merging its units into three main business streams as it seeks to trim costs. business@thenational.ae