Outward bound

The Abu Dhabi United Group grabbed the headlines with its takeover of Manchester City FC, but the move was merely the most visible example of the United Arab Emirates’ foreign investment boom.

Outward bound The great Liverpool FC manager Bill Shankly once said: ­“Football isn’t a matter of life and death – it’s much more ­important than that.” The Abu Dhabi United Group would appear to agree. This month the group bought Manchester City FC for a rumoured £200m, instructing Shearman & Sterling M&A partner ­Laurence Levy.

Media pundits have been quick to ­speculate as to the reasons behind the deal, with explanations ranging from a desire for political influence to one-upmanship over rival emirate Dubai. Whatever the reason, it is another clear sign that the Middle East is ready to make outward investment as well as accept incoming capital.

But Gulf foreign interest does not just stop at mature markets such as the UK. “We’re seeing a growing interest of sovereign wealth funds in the Gulf beyond North America and Europe,” says Nick Eastwell, Linklaters’ regional managing partner for Emerging Europe, the Middle East and North Africa. “They’re looking towards emerging Europe, Africa and Asia.”

There is increasing evidence of the ­United Arab Emirates (UAE) emerging as the legal epicentre of an explosion of outward ­investment, shooting in one direction towards North and East Africa and in the other towards India.
Take Denton Wilde Sapte. The firm has already sent its chairman and Africa group member James Dallas out to Dubai and is on a Gulf-Africa drive.

Yesterday (28 ­September) the firm – which has a network of offices, associate offices and best-friend firms across the Middle East, North and East Africa – transferred trade finance ­partner Simon Cook to its Dubai office.

Cook’s specialism is syndicated lending, acquisition finance and other forms of secured lending. But significantly he has been a member of the firm’s Africa group for a number of years and he will be focusing on that continent from his new base in the Middle East.

“A number of Middle East clients are ­turning their gaze towards Africa,” says Cook. “The market remains to be tapped. It hasn’t been so affected by the credit crunch. It’s a place that needs a lot of development, so there’s a lot of opportunity for ­infrastructure.”

Of late, Dentons’ US-based partners have worked on a number of African telecoms-based deals. Dubai head of corporate and commercial Ibrahim El-Sadig advised Etisalat on a e150m (£118.65m) review of shareholding documentation ­associated with its interests in Atlantique Telecom, Ivory Coast. Meanwhile, Abu Dahbi-based Neuraddin Al Kheir advised Warid on the formation of a joint venture in the telecoms sector in the Ivory Coast worth $60m (£32.48m).

Gulf interests are also looking further east, towards the Indian subcontinent. The niche LG office there plays a key role in the firm’s India strategy, given that international firms cannot yet open across the Arabian Sea.

“If we’d had a choice it would have been a close call between opening in Dubai and India,” says the firm’s head of real estate Rabinder Chaggar. LG has turned its ­interest of late to outsourcing for Indian companies, AIM flotations and private client. “Dubai is a gateway to India,” adds Chaggar.
Traditionally, Indian interest in Dubai has mostly been construction and service sector workers.

“Dubai has had a more sophisticated ­corporate and labour structure than India,” argues Chaggar. But that is changing as the Indian market matures.
Indian companies had traditionally looked towards London, but Dubai is well-placed to pick up Indian work because of its geographical proximity to Mumbai, as well as the cultural links established by the large Indian contingent living there. In addition, Dubai is hoping to capture Asian companies looking to arbitrate in a neutral forum in the Dubai International Financial Centre.

Norton Rose dispute resolution partner Patrick Bourke led a team that drafted the new Dubai arbitration law (The Lawyer, 15 September). This is understood to be a move by the local authorities to establish the ­emirate as an international arbitration ­centre competing with London or ­Singapore, further cementing its status as a go-to destination for international business.

John Lonsberg, partner at Fulbright & Jaworski, who set up the firm’s Saudi Arabia office 30 years ago, argues that the in-flow and out-flow of work is nothing new. He says the major difference is the sheer amount of capital moving around the region. Lately, the firm has advised Gulf-based clients on an energy project in Mozambique and the largest real-estate development in Turkey.

In recent months the deal flow along this axis has still been relatively small. But that can be expected given the summer lull and the month of Ramadan. Once Eid ­celebrations have finished at the beginning of next month, we should expect to see more lawyers being sent out to the Gulf to work on outward investment work.

And with recent changes to the Dubai property law allowing foreign investment and the emergence of an increasingly sophisticated regulatory framework, we should expect to see an increasing flow of work along the Africa-India axis into Dubai as well as out of it.

Gulf outward investment along the Africa-India axis.