Dubai Investment Fund (DIF) has reported stellar performance for 2021 financial year despite global uncertainty. The global investment company with a presence in 17 countries and headquartered in Dubai, manages a $320 billion portfolio for more than 7300 clients across 61 nations. DIF has outperformed other big private equity companies in the Middle East by diversifying investments into different sectors and geographies.
Amir Shams, CEO of DIF, says, “We are aware of global headwinds like increasing inflation, supply chain disruptions, rate hikes by central banks, and increasing cost of borrowing for companies. We see these challenges as an opportunity to invest in companies that generate sustainable growth. DIF continues to diversify into areas that create long-term value. We also hope to generate higher income in the next few quarters as some of our biggest investments are set to go public.”
Even as the fear of recession hits major economics, the company reported its strongest financial year to date. Operating income surged to AED 14.3 billion/$3.8bn (26.83% YoY), while total revenues shot up to AED 180.7 billion/$308.9 bn (4.25% YoY). Currently, the firm’s total assets are AED 1,184.6 billion ($322.9 bn) and total equity of AED 878.1 billion ($239.1 bn).
DIF was established in 2001 in a similar economic environment to today. The company benefited from the increasing foreign investor interests in the UAE and quickly positioned itself in the growing hydrocarbon industry. In 2002, the board appointed Amir Shams as the CEO, who diversified the fund’s portfolio into 27 significant investments and 37 global partnerships. Investing at the recession’s peak, he valued diversification. It paid off well as the company enjoyed steady dividends from its hydrocarbon investments and increased valuations from emerging tech companies. His investment philosophy remains rooted in diversification, making DIF one of the most diversified firms in the GCC region.
Analyzing the aftermath of the 1998 Asian financial crisis, when oil prices plunged below $10 a barrel, Amir Shams, along with the company’s financial analysts, saw a good opportunity to invest in oil in 2002, just after the 2001 oil price dropped sharply from $29 to $18. It was then that the company decided to make investments and took stakes in Statoil, a norwegian petroleum company established in 1972, and Petrobras, a state-owned Brazilian multinational corporation in the petroleum industry headquartered in Rio de Janeiro. And it was the right choice. Since 2002, oil prices have risen almost continuously, and Statoil and Petrobras shares have become more expensive.
The company appointed Mohammed Al-Rashid as the fund’s CIO in 2003, helping consolidate each asset class under a dedicated portfolio manager. He built a core team of 20 domain experts in each field to create a long-term investment strategy.
Mohammed Al-Rashid drew the attention of the company’s management to the emerging market of alternative energy resources. A decision was made to make pilot investments in renewable energy companies. As result, in 2003 DIF made investments in Energiekontor AG and Dongfang Electric. After the audit, it was decided to allocate at least 1% of DIF’s investment portfolio for the purchase of shares in these companies.
Shares of Energikontor AG were bought for less than 2 euros per share in mid-2003, and shares of Dongfang Electric were bought for about 0.5 HKD. These investments without doubt can be called very successful. Some of these shares were sold in early 2008, just before the Great Recession, at a price of more than 5 euros and more than 30 HKD accordingly, bringing DIF profit many times higher than investments.
During 2005-2006 investments were also made in SunTech Power Holdings and SolarFun Power Holdings. In 2010, another promising investment was made at an early stage in JinkoSolar, currently the world’s largest solar panel manufacturer. DIF continues to hold some of these shares to this day. Today, their price exceeds the initial cost by almost 4 times.
The group expanded to 2600 employees in 2022, including 920 investment specialists with an average industry experience of 17 years. The company invests in real estate, energy, infrastructure, commodities, industrials, technology, healthcare and finance. Each vertical is further branched out into specialized companies across multiple countries in the Middle East and Europe. Some of the most significant investments in recent times by the Fund were made in alternative energy, finance, emerging technology, and fintech. DIF has a massive real estate portfolio consisting of residential and commercial buildings, including data centers and AI labs.
As many real estate projects are near fulfillment, DIF is looking to re-invest in next-generation assets in emerging and developing economies. The company is also going deeper with its assets in the financial sector. In recent times, DIF acquired stakes in financial companies specializing in equity, debt, currency, and commodity markets in all major exchanges of the Europe and Asia. It is expected to increase the fund’s penetration into the European and Asian markets and provide flexible investment opportunities for investors with easy exit access.
The group is committed to developing sustainable energy infrastructure. It expects to invest heavily in sustainable energy projects in Europe, the Middle East, Africa, and Southeast Asia by 2030. The company plans to exit some mature investments through secondary buyouts, IPOs, and dividend recapitalization. It can push the company’s earnings to record highs in the next few quarters.
