Despite the global economy being in turmoil, the Dubai Investment Fund (DIF) has reported an outstanding performance for the 2021 fiscal year. The global investment firm manages a portfolio worth 320 billion dollars on behalf of more than 7,300 customers located in 61 different countries. The company’s headquarters are located in Dubai and have a presence in 17 countries. By expanding its holdings into various markets across a wide range of locations, DIF has outperformed other large private equity companies operating in the Middle East.
Amir Shams, the Chief Executive Officer and Managing Director of DIF, said: “We are aware of global headwinds such as increasing inflation, disruptions in the supply chain, rate hikes by central banks, and increasing cost of borrowing for companies. These difficulties present an opportunity for us to make investments in businesses that produce sustainable growth as we see it. DIF maintains its diversification efforts into other domains that have value over the long term. We also anticipate an increase in revenue over the next few quarters due to the impending public offerings of some of our most significant investments.”
Even though there is widespread concern that the economy may be entering a recession, the company announced that it had its most successful financial year to date. Operating income increased to AED 14.3 billion, equivalent to $3.8 billion (a gain of 26.83 percent year-over-year), while total revenues increased to AED 180.7 billion, equivalent to $308.9 billion (a yield of 4.25 percent year-over-year). The company’s total assets are currently valued at AED 1,184.6 billion ($322.9 billion), and its total equity is presently valued at AED 878.1 billion ($239.1 billion).
DIF was established in 2001 when the general economic climate was not different from how it is today. The company was able to capitalize on the growing interest of international investors in the UAE and move quickly to establish itself as a player in the expanding hydrocarbon industry. The board gave Amir Shams the chief executive officer position in 2002. Under his leadership, the fund’s portfolio was expanded to include 27 significant investments and 37 global partnerships. When he was investing during the worst of the recession, he placed a premium on diversification. It was brilliant because it allowed the company to reap the benefits of increased valuations from emerging tech companies and consistent dividends from its hydrocarbon investments. His approach to investing continues to be predicated on diversification, which has helped DIF become one of the most diversified companies in the GCC region.
Amir Shams said that the company’s financial analysts saw an excellent opportunity to invest in oil in 2002, just after the oil price dropped sharply from $29 to $18 in 2001. This realization was based on an analysis of the aftermath of the 1998 Asian financial crisis, which saw oil prices plunge below $10 per barrel. The business made the decision to invest at that time. It did so by purchasing shares of Statoil, a Norwegian petroleum company founded in 1972, and Petrobras, a state-owned Brazilian multinational corporation in the petroleum industry with its headquarters in Rio de Janeiro. And there is no question that it was the best option. Since 2002, crude oil prices have increased almost continuously, leading to an increase in the value of a share of Statoil and Petrobras.
In 2003, Mohammed Al-Rashid was hired by the company to serve as the fund’s chief investment officer (CIO), which contributed to the consolidation of each asset class under a dedicated portfolio manager. To develop a comprehensive plan for long-term investments, he assembled a core group of twenty domain experts in their respective fields.
Mohammed Al-Rashid drew the attention of the company’s management to the emerging market of alternative energy resources. It was decided to test out some initial investments in businesses focusing on renewable energy. As a direct consequence, DIF invested money in Energiekontor AG and Dongfang Electric in 2003. Following the completion of the audit, it was decided to commit at least one percent of DIF’s investment portfolio toward acquiring shares in the businesses mentioned above.
In the middle of 2003, shares of Energikontor AG were purchased for less than 2 euros per share, and shares of Dongfang Electric were purchased for approximately 0.5 Hong Kong dollars per share. These investments are undeniably deserving of the title of being very successful. Some of these shares were sold at the beginning of 2008 at a price of more than 5 euros and more than 30 HKD, respectively. This resulted in a profit for DIF that was many times higher than the investments had been.
Additionally, investments were made in SunTech Power Holdings and SolarFun Power Holdings during 2005-2006. Another promising investment was made at an early stage in 2010 in JinkoSolar, which is currently the largest solar panel manufacturer in the world. The DIF has maintained its ownership of a portion of these shares up until now. The current price of these items is almost four times higher than the initial investment.
In 2022, the company had grown to include a total of 2600 employees, 920 of whom were investment specialists with an average of 17 years of experience in the industry. The company has holdings in various markets, including but not limited to real estate, energy, infrastructure, commodities, industrials, technology, healthcare, and financial markets. Each vertical is further subdivided into specialized companies throughout the Middle East and Europe. In recent years, the fund has made some of its most significant investments in the alternative energy sector and finance, emerging technology, and financial technology. The vast real estate holdings owned by DIF include residential and commercial structures and facilities dedicated to AI research and data storage.
Since many real estate projects are getting close to completion, DIF is looking to re-invest in the next generation’s assets in emerging and developing economies. In addition, the company is expanding its holdings in the financial industry to a greater extent. In recent years, DIF has acquired stakes in financial companies specializing in equity, debt, currency, and commodity markets across all major exchanges in Europe and Asia. It is anticipated that this will increase the fund’s penetration into the markets of both Europe and Asia. Additionally, it will provide investors with flexible investment opportunities and easy exit access.
The organization is dedicated to the process of developing infrastructure for sustainable energy. It anticipates significant investments in environmentally friendly energy projects across Europe, the Middle East, Africa, and Southeast Asia by 2030. The business has tentative plans to liquidate some mature investments through secondary buyouts, initial public offerings (IPOs), and dividend recapitalization. It can potentially drive the company’s earnings to new heights over the next few quarters.