Dubai World's $60bn debt woes raise questions for private equity portfolio

Dubai state development company Dubai World has asked creditors for extensions on its debt obligations after the nation’s property bubble burst. Dubai World holds around $60bn in debt, with $4bn due next month, and has asked for all debt repayments to be held off until May 2010 at the earliest.

Istithmar World Capital is the private equity and alternative investment arm of Istithmar World, and has invested over $3.5bn in 35 companies including entertainment group Cirque du Soleil, publishing house EMPG, and London-based emerging market bank Standard Chartered.

The firm invested $942.3m in US fashion chain Barney’s in August 2007, pouring more money into the business in September 2009 after being unable to find a buyer for the group.

As part of a restructuring move prompted by the company’s growing financial concerns, Dubai World transferred some of its hotel investments from property arm Nakheel to Istithmar in September, naming Nakheel personnal Andy Watson and Binod Narasimhan as CIO and CFO of Istithmar World.

Nakheel is responsible for the man-made Palm Jumeriah islands and the World Islands, a series of islands shaped to resemble a map of the earth.

The nation’s primary exchange, the Dubai Financial Market, has dropped over seven per cent today, as the bourse opened for the first time since Thursday after the Eid holiday.

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