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Abraaj fund unit that managed $14b gets $1 bid

The fund unit of the embattled private equity firm Abraaj Group, which once managed about $14 billion, reportedly received a bid from a London-based emerging market investor for $1.

Private equity firm Actis is among more than 10 private-equity firms that are in the race to buy some or all of the funds managed by the floundering buyout firm.

Top contenders include Canadian real-estate firm Brookfield Asset Management, Chicago-based Vistria Group, Rohatyn Group, Kuwait’s Agility Public Warehousing Co. and Abu Dhabi Financial Group.

Abraaj’s liquidators are also getting offers for regional operations within the unit. According to sources familiar with the matter, Thomas Barrack’s Colony Capital Inc. has also re-entered the race after an earlier deal to buy four of Abraaj’s funds fell through after failing to secure sufficient investor support.

While Colony Capital made an offer for Abraaj’s Latin American operations, Helios Capital Management is bidding for the Africa platform. NBK Capital, the investment banking unit of National Bank of Kuwait, made an offer for Abraaj’s Middle East and North Africa business, informed sources said.

London-based investment firm Centricus, run by co-founders Nizar Al-Bassam and Dalinc Ariburnu, is also in the race by making an offer to buy the Turkish and South East Asian portions of the business.

Abraaj filed for provisional liquidation in the Cayman Islands in June after it came under closer investor scrutiny when it was accused earlier this year by institutional investors including the Bill & Melinda Gates Foundation of mismanaging a $1 billion healthcare fund aimed at investing in hospitals and clinics in parts of Asia and Africa.

The buyout firm’s woes aggravated when a pension fund based in Kuwait said in a legal filing that Abraaj was unable to repay a $100 million loan and asked that the firm be liquidated. Auctus, another creditor, said the firm owes it around $300 million. Following these developments, Abraaj filed for provisional liquidation to get time for debt restructuring.

Actis, which was founded in 2004, has raised $13 billion since inception and employs over 200 people, including a team of 100 investment professionals, according to its website.

Abraaj’s court-appointed restructuring team is seeking to settle more than $1 billion in debts through asset sales. Deloitte LLP and PricewaterhouseCoopers LLP are seeking additional offers for the fund business after its investors rejected earlier bids, people familiar with the matter said.

Meanwhile, Grand Court Justice Robin McMillan has granted a two-month extension of the provisional liquidation of Abraaj Holdings, giving the troubled company more time to avoid being wound up.

Over 1,000 cars recalled in UAE due to fire hazard

Al-Futtaim Motors, distributor of Toyota vehicles in the UAE, has announced a recall of 1,135 Prius cars due to short-circuit and risk of fire.

The company said the affected model was manufactured in 2016, 2017 and 2018.

“The subject vehicles have an engine wire harness which is connected to the hybrid vehicle Power Control Unit. A portion of the wire harness could contact the connector cover and wear over time, causing an electrical short circuit,” it said.

Quoting a Toyota spokesperson, Bloomberg reported that more than a million Prius and C-HR compact crossover vehicles were recalled globally due to the risk of fire.

Among the affected vehicles, 554,000 would be recalled in Japan and 192,000 in the US.

Over 3,200 vehicles recalled in UAE; do you own this brand?

In 2016, Toyota had announced the recall of around 2.87 million Prius due to fuel tank leakage and another 1.43 million – most of them Prius – for non-Takata airbags.

Al-Futtaim said it had started contacting customers with affected models to inform them about the situation and arrange service booking accordingly.

However, customers can contact Al-Futtaim on 800-869682 from 8am to 7pm from Saturday to Thursday.

Tourists in UAE won’t get retrospective VAT refund

Tourists in the UAE are unlikely to get VAT refunds for purchases made before the refund scheme comes into effect from November 2018, according to UAE-based tax experts.

They say that as per Article (68) of Cabinet Decision (52) on Executive Regulations, the Cabinet may issue a decision on introducing tax refunds for tourists, specifying the date from which the scheme comes into effect.

“This means that the tourist refund will come in to effect after the scheme is implemented. So, any goods bought by the tourist will not be eligible for refund if it was bought before the introduction of the scheme,” says Anurag Chaturvedi, managing partner of Chartered House Tax Consultancy.

The Federal Tax Authority (FTA) has clarified that after submission of required documents, a tourist shall be able to claim the refund via credit card or in cash through a global operator, he said.

An invitation sent to retailers and tax consultancies across the UAE by the FTA and the Dubai Chamber of Commerce and Industry disclosed that from November 2018, eligible tourists will be able to receive a proportion of the VAT as a refund when they shop at registered stores. Mayank Sawhney, director of MaxGrowth Consulting, says it is unlikely that the refund scheme for tourists will come into effect from a retrospective date due to the practical issues in implementing it.

“It is most likely going to be effective from the date that the FTA decides for implementation in the fourth quarter of 2018. Therefore, tourists will most likely not be able to get refund of VAT paid on their old purchases,” Sawhney added.

Thais Cunha, associate at Aurifer Middle East, said a Cabinet decision is still awaited on whether the VAT incurred on purchases made before the scheme comes into effect will be refunded and what would be the limitations on claiming the refund.

Taking Europe as an example, Cunha said a tourist can get the VAT paid on certain items refunded once the purchase in a specific shop exceeds a minimum threshold of 175 euros (Dh750). But some countries have a lower threshold.

Chaturvedi said VAT regulations state that there will be limitations on claiming tax refunds.

For example, the FTA may set an eligibility of expense for tax refund in the form of a monetary ceiling. In various tax jurisdictions, supply of value below certain thresholds does not allow VAT refund to tourists.

The FTA may publish a list of goods that shall not be subject to tax refunds for tourists, Chaturvedi added.

Sawhney said the VAT refund for tourists will be applicable only on the goods which are physically taken out of the UAE. Therefore, tourists will not be able to able to get refund of the VAT they pay on the goods and services that they consume within the UAE.

“For example, tourists may not get refund of VAT paid on food and beverages they consume in UAE hotels and restaurants, VAT they pay on hotel room charges, VAT on tickets for water parks, theme parks, etc., as these goods and services are consumed by them within the UAE,” added Sawhney.

Cunha said VAT incurred on food and beverages consumed by the tourist while in the country is usually not refundable, since there is no refund on services.

“One of the conditions to receive the refund of the VAT paid on goods bought in the country is that the tourist takes the relevant good to a place outside the UAE. Therefore, if goods were bought and consumed within the UAE, there will be no refund of the VAT,” she added.

 

How much property can $1m buy you in Dubai?

Prices of luxury property in Dubai are much more affordable when compared to global cities.

For instance, $1 million can only fetch you 16 square metres of prime property in Monaco, 22sqm in Hong Kong, 29sqm in London, 99sqm in Mumbai and a whopping 137sqm (1,485sqft) in Dubai as of Q2 2018, according to Knight Frank.

Dubai prime properties are also way more economical than in cities such as New York, Los Angeles, Miami and Singapore. This is because the Dubai property market is still a newcomer in comparison with the globally established cities. The volume of demand for prime property is significantly higher in cities with more established markets.

“On an average price level, $1 million will buy 3,028sqft [281sqm] in Dubai. It can buy 1,474sqft or 137sqm of prime property in Dubai,” says Taimur Khan, research manager at Knight Frank.

There are many Dubai communities where you can find property at this price point, both apartments and villas – Downtown, Palm Jumeirah, Emirates Hills and Emirates Living – to name a few.

“$1 million would buy you a two or even a three-bedroom luxury apartment in a sought-after building in Dubai Marina, on Palm Jumeirah or in Downtown Dubai. With that budget, one could acquire an apartment with good views, design and facilities. For those wishing to buy a villa, $1 million would go a long way, with the open market currently presenting some three and four-bedroom homes in Arabian Ranches, Jumeirah Park, Victory Heights, Meadows, Jumeirah Golf Estates or even a new Sidra or Maple at Dubai Hills Estate,” observes Jason Hayes, founder and CEO of Luxury Property.

Dubai luxury property is generally purchased by a combination of both local and overseas buyers. “The composition very much depends on the type of produce which is on offer, with more second home style properties tending to attract a bit more international interest,” adds Khan.

According to Knight Frank, prime property prices in Dubai fell by 0.8 per cent in the year to the second quarter of 2018. However, market observers believe the luxury property market is close to bottoming out.

“Luxury property prices seem to have bottomed out and there seems to be a revival in sentiment in high-income gated communities such as the Arabian Ranches, Emirates Hills, Palm Jumeirah as well as in Dubai Marina. There has been a slow but steady uptick in demand,” notes Sameer Lakhani, managing director of Global Capital Partners.

Although there are fears of oversupply plaguing the mainstream market, this does not pose as much of a threat to the Dubai prime residential sector. “This explains the only small decrease in prices of 0.8 per cent. Additionally, this trend also varies very much from community to community. In the super prime market [the top five per cent of the market] we are witnessing sustained levels of demand,” reckons Knight Frank’s Khan.

Demand for Dubai’s luxury homes remains strong and prices have remained stable. There has been an increase in active listings and sales of luxury properties in Dubai.

“The market is robust with clients viewing a wide variety of options and making informed decisions. Dubai is very much a maturing/matured market, with a number of different options across all price points. Buyers now have great options to choose from and we find the marketing period for properties longer than it once was. The fundamentals of Dubai as a place to invest and live remain as strong now as they ever were. They are even stronger now in the light of recent immigration and company ownership announcements,” concludes Hayes.

Dubai gold prices rise as dollar slips

Gold extended gains on Friday as the dollar fell against the yen after a report suggested that US President Donald Trump would next take up trade issues with Japan, while investors feared a new round of Sino-US tariffs could come at any moment.

Spot gold was up 0.2 percent at $1,202.14 as of 0219 GMT, after it hit a near one-week high on Thursday at $1,206.98, and headed for a third straight session of gains.

US gold futures rose 0.3 percent to $1,208.0 an ounce.

The dollar declined further against the yen following a CNBC television report on Thursday that Trump told a Wall Street Journal columnist he might take on trade issues with Japan.

“The stronger yen versus dollar is leading to some buying in gold … The recent low of around $1,160 in August is really the bottom in gold for now,” said Yuichi Ikemizu, Tokyo branch manager, ICBC Standard Bank.

“The next moves will mostly depend on the employment data tonight and the September Federal Reserve meeting. But it mostly looks like gold is slowly coming up and the dollar is coming off as gold is too oversold and the dollar has been overbought.

Another big worry for investors was the end of a public consultation period over trade, after which Trump could impose tariffs on $200 billion more in Chinese imports.

China’s commerce ministry warned that the country would retaliate against any new tariff measures..

Meanwhile, markets will be closely watching a US employment report due later in the day for cues on the pace of interest rate hikes by the Fed.

The payrolls report is expected to show a robust rise of 191,000, in part as July was temporarily depressed by the closure of the Toys R Us chain that month.

Current economic conditions are “as good as it gets” for the US central bank, New York Federal Reserve bank President John Williams said on Thursday, with steady inflation and low unemployment allowing the Fed to continue gradually raising rates.

“Gold faces a quick correction if US jobs data, inflation in particular comes in near or above target. The Fed has hiked two times in 2018 and is on course to lift rates twice more,” said Alfonso Esparza, a senior currency analyst at OANDA.

Gold has tumbled more than 12 percent from a peak of $1,365.23 in April. Present levels have recently invoked a lot of physical buying in Asia, traders and analysts said.

Among other precious metals, spot silver rose 0.5 percent to $14.19 per ounce.

Platinum was steady at $791.40, while palladium fell 0.3 percent to $975.

Dubai future accelerators scheme draws global interest

The Dubai Future Foundation (DFF) on Saturday announced closing the registration for the fifth cohort of the Dubai Future Accelerators programme, and receiving applications from startups and global companies from 74 countries.

The programme received over 600 applicants in which they will undergo a rigorous evaluation and selection process. Ultimately, selected companies will have the opportunity to take part in the Dubai Future Accelerator programme and tackle challenges launched by government entities and create innovative and smart solutions through the use of advanced technologies such as Artificial Intelligence (AI), advanced technologies, Internet of Things (IoT) and Blockchain. The programme’s fifth cohort is expected to start in mid-September.

The programme has 12 government entities: the Department of Economic Development, the General Directorate of Residency and Foreigners Affairs in Dubai, Smart Dubai, Dubai Municipality, Emirates airline, Dubai Police, Roads and Transport Authority, Knowledge and Human Development Authority, Dubai Health Authority, Dubai Electricity and Water Authority, Etisalat Digital and Emirates Integrated Telecommunications Company (du).

Saeed Al Falasi, executive director of future platforms at DFF, said the Dubai Future Accelerators programme is an important platform that brings together government entities in Dubai as well as start-ups and well-established global companies to find innovative solutions for current and future challenges, and make use of the latest technological developments around the world.

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