> Economics & Policy
Emirates Healthcare Buyout
Dubai’s largest private hospital operator, Emirates Healthcare Holding Ltd. (EHL), has been acquired by South Africa-based Mediclinic International in a cash buyout valued at $223.6 million. Mediclinic assumed control of the 49.63 percent in EHL it did not already own by agreeing to pay $200 million for the 44.39 percent stake of United Arab Emirates-based Varkey Group and $23.6 million for the 5.24 percent stake of United States-based General Electric, at price per share equal to that paid to Varkey. EHL operates two hospitals and eight outpatient and walk-in clinics in Dubai, with the 210-bed City Hospital in Dubai Healthcare City as its flagship facility. Mediclinic assets include more than 50 hospitals in South Africa and Namibia and private hospital group Hirslanden in Switzerland with 14 hospitals. Varkey Group, which co-founded the Welcare predecessor venture of EHL in the United Arab Emirates in 1984, explained the sale of its stake allowed it to concentrate on its growing education business, GEMS. Mediclinic, which is listed on the Johannesburg Stock Exchange, said in an August 27 note to shareholders that its business in Dubai has grown at an exceptional rate since the group entered the market in 2006. With The City Hospital as the main driver since its opening in 2008, EHL revenues have grown from ZAR 482 million ($57.4 million) in 2008 to ZAR 1,831 million ($218.2 million) in the financial year ended March 31, 2012. The year-on-year revenue increase at EHL was 37 percent in fiscal year 2011/12 and the earnings before interest, taxes, depreciation, and amortization margin was 19.2 percent. “Emirates Healthcare is ideally positioned to benefit from the ongoing growth within the UAE and surrounding regions,” Mediclinic said in the note, adding that it will finance the acquisition with an equity contribution of ZAR 1 billion ($119.2 million) and the balance to be raised in debt in the UAE.
> Banking & Finance
U.S. seizes $150 million in ‘Hezbollah funds’…
The United States authorities announced they had seized $150 million that they claim was used by Hezbollah entities to launder money. The seizure is the result of a civil complaint filed in 2011 in New York against the now defunct Lebanese Canadian Bank, acquired by Société Générale de Banque au Liban (SGBL) in September 2011 for $580 million. The lawsuit asserts that entities linked to Hezbollah were channeling funds from Lebanon into the US financial system between January 2007 and early 2011 to acquire used cars to then sell in West Africa for cash, which was then transferred back to Lebanon along with funds from drug sales and other crimes. SGBL placed the $150 million in escrow at a New York correspondent account of Lebanon’s Banque Libano Française (BLF) pending the lawsuit. BLF and SGBL are not accused of any wrongdoing according to the prosecutors.
> Banking & Finance
…and scrutinizes banks for Iran dealings
Standard Chartered Bank (SCB), Deutsche Bank and Royal Bank of Scotland (RBS) are the latest banks in the hot seat for their dealings in Iran. New York’s superintendent of Financial Services Benjamin Lawsky accused United Kingdom-based SCB last month of helping Iranian banks and corporates hide some 60,000 transactions worth at least $250 billion, between 2001 and 2010. SCB agreed to pay a record $340 million penalty to settle the charge and prevent the revoking of their New York license. The regulator is also accusing the bank of having similar schemes with other countries sanctioned by the United States, such as Burma, Libya and Sudan. Lawsky said the “rogue bank” is being aided by its consultant Deloitte & Touche, an accusation that Deloitte’s Chief Executive Joe Echevarria considers “distortions of the facts.” Deutsche Bank is also being scrutinized by US authorities according to the New York Times, but with the investigation still at an early stage, no accusations have been put forth as Executive went to print. RBS has volunteered information to the UK and US regulators concerning its dealings with Iran following an internal review.
> Banking & Finance
Egypt requests $4.8 billion from the I.M.F.
Egypt’s president Mohamad Morsi has asked Christine Lagarde, the International Monetary Fund’s (IMF) chief, for a $4.8 billion loan to cover the country’s budget deficits. Talks between Egypt and the IMF have been ongoing ever since president Hosni Mubarak was deposed last year, but a deal failed to go through as the IMF required broad political support as a key condition for the loan. Following the formation of a government by President Morsi and his dismissal of top army generals, the deal is expected to be given the green light, with Lagarde stating that, “It is going to take a bit of time and we feel that we have perfectly competent authorities to negotiate with.” Egyptian Prime Minister Hisham Kandil expects the loan to be signed by the end of the year and be for five years, with a grace period of 39 months and interest rate of 1.1 percent. With limited alternative options, the Egyptian government had to borrow a hefty $12 billion from its central bank in the 12 months to June 2012.
> Economics & Policy
Just Falafel
Just Falafel has taken what used to be a local food staple, falafel, and went global with it. Owned by the Lebanese Fadi Mallas, Just Falafel opened its first store in Abu Dhabi, United Arab Emirates, in 2007. The menu began with the traditional Lebanese falafel sandwich, with the “tarator” dressing, but creatively expanded to include international tastes (such as the Italian sandwich which is served on ciabatta bread or the Japanese sandwich which comes with soya sauce). Today, Just Falafel has 25 stories in UAE, Oman and Jordan and is looking to open 60 to 70 more stores in the UAE in the next two to three years. Store locations in the UAE include most popular malls such as the Mall of the Emirates, with plans to open in Dubai Mall and Ibn Batuta Mall. “Mall operators in the UAE are beginning to feel their food court is lacking if it doesn’t have a Just Falafel store. We offer an alternative food proposition, especially to vegetarians.” With their established success in the Gulf, Just Falafel is now looking for other markets, and is on an aggressive quest to franchise the brand. Mallas has already signed franchising contracts for a few dozen stores in the UK, and is now considering India, where falafel is a popular dish. Other potential markets include the United States of America and Canada. According to Mallas, Just Falafel receives around 15 franchising requests from international markets per day. Just Falafel opened its first shop in Lebanon, on Bshara Khoury Street, Beirut last month and plans to open another store in City Mall, Dbayeh shortly.
> Real Estate & Development
Syrian mall project stuck in indefinite pipeline
United Arab Emirates-based developers Majid Al Futtaim (MAF) says the long-term outlook for the Syrian economy and the Syrian consumer keeps them committed to the $1 billion Khams Shamat project outside of Damascus, but Iyad Malas, the group’s chief executive, conceded in a recent interview with CNN that it is almost impossible to carry on with orderly planning of the project amid the nation’s upheaval. “We hope that things settle so that we can start construction. In reality, today it is very difficult to get contractors to even talk to you about potentially building [in Syria]”, Malas told CNN’s Marketplace Middle East program in early August, coming exactly one year after MAF had announced that it was starting to pour foundations at Khams Shamat. Plans for the mixed-use project, located on a one million square-meters plot just off the Beirut-Damascus International Highway, are to comprise vacation apartments and business spaces anchored by a 300-store shopping mall, which is to be the Levant region’s largest according to MAF.
> Economics & Policy
Talking up the emirates
The two largest telecommunications operators in the United Arab Emirates saw profits go up in the second quarter of 2012, according to announcements the companies made in the last week of July. Etisalat, the Abu Dhabi-based group that is today the second largest telecommunications company in the Middle East after Saudi Arabia’s STC, posted $517 million net profit for the second quarter of 2012. Its younger rival Du, based in Dubai, reported $88.6 million net profit for the same period. While Etisalat came out far ahead in the bottom line, Du achieved significantly faster growth between the two. Its results were up 57.1 percent when compared with the second quarter of 2011. Etisalat’s year-on-year quarterly profit growth rate was 17 percent. Etisalat, however, suggested that it might soon become more attractive again to investors as the company stock could be opened to foreign ownership. Etisalat chief executive Ahmad Julfar, who was appointed to his position one year ago, told media that the company is pushing its 60-percent owner, the UAE federal government, to lift a measure that bans foreigners from owning shares in the company. The company could also further increase its stake in the Saudi operator, Mobily, to gather further points in the struggle for regional markets.
> Banking & Finance
Qatar investment spree continues
This time, Qatar goes after China. Its sovereign wealth fund, Qatar Investment Authority (QIA), has acquired a 22 percent stake in Chinese investment fund CITIC Capital Holdings, known for its investments in real estate and private equity. CITIC is partly owned by CIC, China’s sovereign wealth fund. While the size of the investment was not disclosed, the deal is expected to have a significant impact as it links two major sovereign wealth funds. Back in the United Kingdom, a country Qatar is very familiar with through its numerous investments, the peninsula has been eying a stake in UK-based airport operator BAA, owner of London’s Heathrow airport, the third busiest airport in the world. Qatar Holding is set to acquire a 20 percent stake for £900 million ($1.4 billion) in BAA from Ferrovial, the Spanish company owning 49 percent of the operator. Qatar will become the third largest shareholder in BAA after completion of the deal. “This acquisition is a key element in our exposure to the infrastructure sector,” said QIA in a press release.
