DUBAI: DP World said Tuesday its parent has dropped out of talks to sell a piece of the port operator, suggesting Dubai is reluctant to loosen control of its most prized assets as it tries to fix its finances.
The cargo handler, which is majority owned by the Dubai government, said in a brief statement posted on the Nasdaq Dubai Web site that discussions about a possible sale “are no longer ongoing.” A spokeswoman declined to elaborate.
DP World, the world’s fourth-largest port operator, said in May its indebted parent Dubai World had entered into negotiations with a regional private equity firm about a possible partial sale of the port company.
The suitor was never named, though several media reports identified it as Dubai-based Abraaj Capital. An Abraaj spokesman declined to comment.
Dubai World, a conglomerate with business interests ranging from real estate to tourism, is saddled with nearly $60 billion in debt racked up during the city-state’s rapid economic expansion into a financial and logistics hub earlier this decade.
Bankers are eager to see how the sprawling government-owned company will pay off its debts, including a $3.5 billion pile of loans owed by its Nakheel property division that come due this year. Dubai had to turn to the federal government for a $10 billion loan package this year as it struggled with the fallout from the global downturn. Another $10 billion is expected later in the year.
Still, the city-state’s leadership is eager to project a business-as-usual attitude. “I assure you we are all right,” Dubai ruler Sheik Mohammed bin Rashid Al-Maktoum told reporters when asked about the debt load before unveiling the city’s new $7.6 billion metro train line last week. “We are not worried.”
Ongoing uncertainty about the emirate’s financial health has led to widespread speculation that parts of the various state-linked companies collectively known as Dubai Inc. could be on the auction block.
Dubai World’s private equity division Istithmar World, for example, has had to defend itself against media reports in recent days that it is in trouble.
The conglomerate says the division is “actively managing a portfolio of investments worldwide, and will continue to be a key subsidiary into the future.”
So far, rumors that crown jewels such as Emirates airline, luxury retailer Barneys New York or the Queen Elizabeth 2 cruise liner could be sold have proved unfounded.
Rachel Ziemba, an analyst at RGE Monitor who tracks the finances of Gulf investors, said the breakdown in Dubai World’s talks signals Dubai wants to avoid any sign it is willing to offload its most successful assets on the cheap.