|
Dubai: Khalid Kalban is a well-known UAE businessman. As managing director and CEO of Dubai Investments, a diversified investment holding company, he keeps tabs on developments in a variety of business sectors. The group has a total asset value of Dh13 billion.
Born in 1956, Kalban has been involved in the setting up of many companies in the country. Apart from heading Dubai Investments, he is a member of the board of directors at Emirates NBD, Emirates International Brokerage, Saudi International Petrochemical Company, Arab Insurance Group, and Thuraya Satellite Communications. He is also vice-chairman of Singapore-based Al Khaleej Investment PTE.
Kalban has a degree in business management from Arapahoe Community College in the US and has majored in management at the American-based Metropolitan State College.
In an exclusive interview with Gulf News, Kalban offers his views on the investment climate in various sectors and his company's growth plans. Excerpts:
Gulf News: Your group has many subsidiaries and you keep adding new ones. What are your future expansion plans?
Khalid Kalban: Our focus is on three broad activities: property investments, industrial sector and passive financial investments. In passive investments, we take between five and 20 per cent stake in a company.
As far as investments in properties are concerned, we have projects worth not less than Dh25 billion under consideration. Projects worth Dh5 billion are already under construction. We are completing the master-plan for a major project in Ajman.
What is your view of Ajman's property market? There have been some big announcements, for example, the Al Zorah development.
There is a spillover from Dubai and Sharjah. Ajman is positioning itself as a location near Dubai. It is investing in infrastructure like a cargo village, airport and a network of highways. We are upbeat about Ajman. These projects will be developed over a long period of time, so it is a continuous and sustainable development of Ajman. So what is happening in Dubai is spreading to other emirates. When you think of Dubai and Sharjah, you also think of Ajman.
With the local economy continuing strong growth and population increasing, do you have plans to expand your capacity in the industrial sector?
Emirates Glass will quadruple its production to 3.5 million square metres of glass. We are building a huge processing plant. We are investing Dh50 million in constructing a new facility in Jebel Ali. This is a relocation of the existing project in Al Quoz industrial area. This expansion is to cater for new demand for glass as construction is going on everywhere.
We have a factory in Abu Dhabi called Emirates Float Glass. It is going to make raw material needed by Emirates Glass. We will start commercial production at that factory no later than November. We have just added a new production line. The existing factory and expansion will cost us $400 million. The output is going to be supplied to the whole Middle East market.
We will come up with new products that cater for the trend of generating solar power. Saudi American Glass in Riyadh will receive Abu Dhabi's production. Then there are a couple of acquisitions we are planning. We are also building a processing plant in Qatar with an investment of Dh100 million.
With these investments, we will have not less than $500 million invested in the glass industry alone. This is what we have already invested, except for the coming Saudi acquisitions. We are still doing the evaluation of those companies.
On what other sectors are you focussing your attention?
We had a five-year expansion plan for Marmum Dairy starting in 2003. Marmum is selling not less than 100,000 litres of milk and juices every day. When we acquired this company about 10 years ago, it used to produce 10,000 litres.
You had talked about the rise in costs sometime back. What is the situation now?
For the last 10 years, milk prices have gone up less than 20 per cent, while [the prices of] other products have gone up 10 times. Regardless of whether there is an increase in the price of animal feed, diesel, labour, dairy products are considered strategic and their prices have been contained tremendously.
Does that discourage you from investing more in this business?
This is a volume business. If you are bigger, you are better. Through more investment, you can bring efficiency, and through that, lower costs while maintaining the price level. Inflation puts a lot of strain on the management to cut costs here and there.
How does inflation affect export opportunities for UAE companies compared with, for example, their counterparts in Saudi Arabia?
In Saudi Arabia, their manufacturing facilities are huge, so there is the efficiency factor. In the UAE, we have smaller setups that are efficient. Because investment is less, the risk is also less. It is easier for us to export from the UAE because of the country's location and port facilities.
We have Emirates Glass exporting to so many countries, and Global Pharma is selling to 25 to 30 countries. Inflation is everywhere, not just in the UAE. Raw material costs have gone up worldwide. Once the dollar gains, things will get better.
Do you plan to take any of your company public?
There are two routes for us to grow: either through an IPO or through private placement. There are so many restrictions on companies to do an IPO. There are restrictions in evaluation and in the percentage of divestment. If you want to list, then you cannot list less than 55 per cent. There should not be any such restriction. It is not according to world standards; it only exists in the UAE. The Ministry [of Economy] and Esca [Emirates Securities and Commodities Authority] are very rigid in their evaluation. This is not encouraging.
But do you have any specific listing plans?
All these companies have to be listed sooner of later when the business environment is right. This would require a huge structure. We want to bring in strategic investors. This year we privately placed M'Sharie by selling 40 per cent of this company to about 10 investors.
We are also looking for a couple of private placements for 2009. We are engaging consultants and advisors to structure these deals.
In which companies are you selling stakes?
These are not decided yet. There are three companies but we do not know yet which one will take priority. It depends on the market environment.
How are your projects in Fujairah progressing?
We have set up Al Taif Investments there. We have two projects in Fujairah. One of them is in the tender process. One is Fujairah Business Park, with an office tower, a hotel tower, an office tower and a shopping mall. This is a Dh1 billion project.
We have another project called The Park. This is in the final stage of designing. The government has already given the green light for this project. We have a couple of manufacturing facilities planned. One is a gypsum board factory with an investment of $15 million. This plant is under construction. It will take another six to nine months for commissioning. It is significant for the market.
There are so many factories coming up in this sector. Then we are going to have an aluminium extrusion plant. This investment is going to be around Dh250 million.
Several gypsum board factories are being built in the UAE. What will be your markets?
There is good demand locally. If there are additional plants planned then I would be worried. The UAE imports almost 90 per cent of its gypsum board requirements now. If you have local production, then it is good. The projects that have been announced will cover almost 90 per cent of the market. This is a fast growing market. The rate of growth is high - that is why everyone is jumping into it.
What is your outlook for the UAE stock markets?
It will get worse, before it gets better. We will still see some diminishing value on the stock markets. I do not see a rally for the coming three months. Towards the end of the year or in early next year you will see improvement.
What are the reasons for the stock market decline?
I think there is a lack of liquidity and speculators are a bit worried. The direction of global economy is not clear. For the coming three months we will still see some uncertainty. But the market will come to its senses because the economic fundamentals in the UAE are strong.
Growth in profit is unbeatable this year compared with 2007. The minimum companies have grown is by 25 per cent. I am very bullish. The liquidity is shying away because of the uncertainty. There are very good deals in the market.
|
