Dubai asset sales could provide much-needed work for regional investment bankers

Dubai Inc is being urged to sell some of its international trophy assets as part of the ongoing restructuring of its $22bn debt. This is, of course, likely to necessitate some much-needed advisory work for investment banks in the region, but sadly recruitment seems unlikely as a result.

Moody's says that Dubai World needs to place more of its performing non-core assets up for sale, such as Ithithmar's stakes in Standard Chartered, SR Technics, Kerzner Cirque de Soleil and the QE2.

"We believe that further major asset sales will constitute one of the conditions of any amicable restructuring agreement with Dubai World's creditor banks," says Philipp Lotter, senior vice president at Moody's in Dubai.

Rothschild and Deloitte are currently advising on Dubai World's restructuring plan, and a proposal is due to be presented to creditors in March.

Isthithmar is preparing the sale of its shipping business, Inchcape Shipping Services, and is being advised by Bank of America Merrill Lynch and Royal Bank of Scotland. Further mandates could be up for grabs in the near future, and Moody's is predicting a "long and drawn out process", particularly if Dubai wants to avoid firesales.

Mark Swan, director, MENA at Principal Search, says: "Once these mandates are awarded, it's likely that at lot of the experts advising will be working within investment banks outside of the Middle East. I don't believe this will have any impact at all on local recruitment."

Lotter agrees that local bankers are unlikely to feel the benefit of these deals and says that firms in the GCC will want to see a sustained pipeline of advisory work before they'll consider bolstering their regional teams again.

"If anything, banks have been retreating from the region recently," he says. "Obviously, this is a temporary situation, but the general economic environment has to pick up before banks will consider hiring again."

The Dubai World debt situation has hit the headlines again, after news that the state-controlled conglomerate plans to repay its lenders a mere 60 cents for every dollar owed.

Dubai is keen to avoid a standstill over debt negotiations. Ongoing delays could impact future international investment into the emirate, reckons UK business secretary Peter Mandelson.