The UAE’s eternal tug of war
With Dubai and Abu Dhabi clashing over the acquisition of the Morgans Hotel Group, it brings up the all too familiar debate between the two Emirates
August 13, 2008 10:15 by kippreport
The clichéd Dubai-versus-Abu Dhabi battle has just entered a new round. Sovereign wealth funds from both the cities are fighting to acquire control of the Morgans Hotel Group, reports the Times.
Dubai-based Zabeel Investments, which has stakes in Sony and the European Aeronautic Defence and Space Company (EADS), is battling Mubadala, the investment and development arm of the Abu Dhabi Government, which has stakes in Ferrari, the Carlyle Group and aerospace company Piaggio Aero. The two have apparently approached Morgans with offers valuing it at around $1.4bn, including debt.
Morgans, which was founded in by Ian Schrager and Steve Rubell (owners of New York’s iconic discothèque, Studio 54), runs ten hotels that are renowned for their style and chic. They include the Delano in Miami, the Clift in San Francisco, the Royalton and Morgans hotels in New York and the Sanderson and St Martins Lane hotels in London.
With the region’s obsession with ‘est’(biggest, tallest), and the phenomenal pace at which developments are coming up in the region, it’s no wonder that the two are eyeing the hotel group. But who will win this round?
Last month, the Abu Dhabi government forked out around $800m for a 90 percent stake in New York’s Chrysler Building. Mubadala also announced plans to become one of the 10 biggest institutional investors in General Electric (GE) as it entered an $8bn joint venture with the group to set up a commercial finance business. Dubai’s response came earlier this month, when Istithmar and Nakheel, part of state-owned Dubai World, acquired a 20 percent stake in the French- Canadian circus company, Cirque du Soleil.
According to Morgan Stanley estimates, the UAE has the largest sovereign funds by asset size in the world, valued at $875bn. And with most of those funds distributed between companies in Dubai and Abu Dhabi, the two are racing to pour money into eager international companies.
But the competition is not only being fought in the sovereign funds arena, it extends to all fields.
In response to Dubai’s iconic seven star hotel Burj Al Arab, Abu Dhabi built the luxurious and stylish Emirates Palace hotel. While Dubai has been churning out newspapers Gulf News and Khaleej Times for the last 25 to 30 years, Abu Dhabi recently launched The National, to cover the capital’s news.
Thanks to its glitter and glamour, Dubai has managed to attract more attention that its richer neighbour in the past, but Abu Dhabi is now quickly catching up. The city is using its oil money to project itself as the cultural hub of the region, and its Saadiyat Island will soon boast of four museums, including the Louvre and Guggenheim.