Gulf firms eye bargain buys amid global crisis
Dubai, November 8, 2008
From utilities to private equity groups to investment banks, Gulf firms told Reuters they were on the prowl to snap up companies and stocks at bargain prices as the global financial crisis bites.
Not only are cash-rich players from the oil-exporting region seeking to acquire smaller companies struggling to survive the turmoil, but some are also eyeing 'special situations funds' to invest in stocks whose current market prices no longer represent the real value and long-term potential of the firms.
State-controlled Abu Dhabi National Energy Company, which invests the emirate's oil wealth, told Reuters it was eyeing acquisitions under $1 billion in energy firms struggling to cope with credit or equity conditions.
In neighboring Dubai, developer Deyaar told the Reuters Middle East Investment Summit it was keeping a close eye on distressed real estate firms across the region for potential acquisitions over the next year.
Asked if the Gulf's largest bank by assets was willing to take the lead to acquire troubled rivals, the chief financial officer at Emirates NBD said: 'That's a role we are ready to take on... We are ready to consider the right targets at the right prices.'
While the global crisis is squeezing profit margins and dampening growth in the Gulf Arab world, executives from some of the region's top firms told Reuters it also provided unprecedented opportunities for investors who could properly assess which firms were truly in trouble and which remained good buys.
They warned that Western leaders asking Gulf Arabs to salvage ailing US and European blue chips should expect shrewd negotiations not oil sheikhs willing to drop bags of cash.
'They are thinking everything is the way it was previously and they can command the kind of prices that they can and because I look the way I look and I wear this thing here I'm going to pay them a lot more than their company is worth,' said Mohammed al-Hashimi, executive chairman of Zabeel Investments, pointing to the traditional headdress he was wearing.
'It doesn't work that way, we're not stupid... Opportunities in the US are there and I'm interested but until people get their heads out of the clouds and become realistic, we'll wait.' - Reuters