Dubai World debt-freeze hits Informa shares

The Dubai government’s
debt-freeze request could have a major impact on Informa’s events business in
the region, according to UK City analysts.

Dubai World, the
government-owned investment company behind the emirate’s rapid development
drive, has asked its creditors for a six-month delay on repaying its debts, a
request, which “may be considered a [debt] default” according to global
credit rating agency Standard and Poor’s. After six years of rapid growth, Dubai’s days of super
spending are stalled. The now-humbled emirate was due to repay $3.5bn of its reported
$59bn-plus debt mountain next month.

The
news rocked financial markets around the world, causing the UK’s FTSE 100
index to plunge 171 points – its biggest one-day fall in eight months – and saw
£14 billion wiped from the value of British banks on fears they would be left
nursing new losses.

“News of the debt
standstill request by Dubai World continues a bad week for Informa,” says Morgan
Stanley market analyst Patrick Wellington. “The large scale events business of
Informa is heavily weighted towards Dubai and
the Middle East.”

Informa’s Dubai events, which
typically take place in the Dubai International Exhibition Centre in the early
part of the year, include Cityscape; perhaps the largest property show in the
world, as well as Middle East Electricity and Arab Health. “These are some of
the most profitable events in the Informa portfolio,” says Wellington. “We believe that Dubai-specific shows
are worth around £75m each year and have continued to grow fast.”

Morgan Stanley’s
forecasts assume zero revenue growth for the organiser’s international events
in 2010, although Informa stresses its events are not funded by the Dubai government. Sources
close to the company say money from exhibitors for 2010, who are mainly
international and not local, is banked with ‘bookings well ahead’.

Dubai Government Department of Tourism and Commerce’s
marketing director (UK&Ireland) Ian Scott, however, tells Conference-news
the Dubai government remains “wholly committed to attracting 15 million
international visitors to Dubai by 2015”, and predicted the world’s tallest
tower, Burj Dubai, would open on 4 January 2010.  

“Of course, we recognise the challenges of the
current climate but our commitment to ongoing development continues,” he says.

Informa confirms
that it is in discussions with shareholders about acquiring rival publisher and
events organiser Springer.

“On the right
terms, an acquisition of Springer would be an important strategic step for
lnforma,” an Informa statement says.

The combination would be expected to
generate significant synergy benefits from rationalisation, although City
thinking is that Informa would need to raise as much as £1.5bn to secure a
takeover of Springer.

Paul Colston

Author

Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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