Dubai investment fund takes 'substantial' stake in Sony

The fund's first investment in Japan announced this week

Dubai International Capital has bought a "substantial" stake in Sony, another sign of Middle Eastern investors' growing interest in technology.

The investment, announced Monday, is also a vote of confidence for Sony, which is going through a major restructuring. Dubai International Capital (DIC) expects its investment to grow in the medium term as Sony applies its brand and product design skills to emerging technologies, it said.

DIC did not disclose the amount of the investment, its first in Japan. The fund through which it was made, Global Strategic Equities Fund, manages assets of around US$2 billion. Its recent acquisitions include a 3.12 percent stake, worth around US$837 million, in European aircraft manufacturer EADS NV.

Shares in Sony rose 4.6 percent on the Tokyo stock exchange Monday on news of the Dubai investment, although Sony representatives reached in Europe were unable to confirm the news.

Sony is refocussing on core activities and selling off others. In October it raised US$2.5 billion from the sale of a stake in its financial services division, Sony Financial Holdings. The division was among its most successful businesses, with an operating profit margin of around 13 percent, compared to 3 percent from its electronics activities.

Dubai, one of the states making up the United Arab Emirates, is not the only one interested in technology investments: On Friday, Mubadala Development of Abu Dhabi paid US$622 million for a stake in Advanced Micro Devices.

Mubadala is owned by the Abu Dhabi government, while Dubai Holding, the parent company of Dubai International Capital, is owned by the ruler of Dubai.

Much of the wealth of the United Arab Emirates comes from oil. As these countries' proven oil reserves are depleted, their rulers are seeking to invest oil income in other industries to ensure their financial future.

Sovereign wealth funds like those of the United Arab Emirates, and also some Asian economies with significant foreign currency reserves, are now a bigger source of investment capital than hedge funds and private investment funds, according to a recent study by McKinsey & Co.

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