Sony welcomes heavy investment from Dubai's sovereign funds

Foreign investment company Dubai International Capital said on Monday that it has made a “substantial” investment in Sony. While spokespeople for the company are not revealing the size of the investment, the Wall Street Journal believes that the stake is less than 5 percent, as any higher the firm would be required to make a public disclosure according to Japanese law – but no such disclosure has been made.

Dubai International Capital’s (DIC) investment, even at just under 5 percent, is considered substantial considering Sony’s largest shareholder Dodge & Cox is recorded to own 8.3 percent. The investment company said that it chose Sony because of its “ongoing strategy of focusing on capital efficiency and cash generation,” and that it expects its shares to grow in the medium term, serving as a vote of confidence for the Japanese electronics maker.

Quickly following news of the Dubai buy, shares of Sony Corp. rose 4.54 percent or 250 yen, closing at 5,750 yen with 18.01 million shares changing hands on the Tokyo Stock Exchange. Conversely, Nintendo shares fell 1.28 percent or 800 yen to 61,700 yen.

DIC, owned by Dubai Emir Sheikh Mohammed bin Rashid al-Maktoum, was founded in 2004 with $13 billion. According to Dow Jones, DIC plans to raise a further $600 million following its buy into Sony. Due to the swell in energy prices, Middle Eastern funds have trickled into technology investments. Mubadala Development Company, a United Arab Emirates government-funded investment firm based in Abu Dhabi, has acquired an 8.1 percent stake in AMD for $622 million.

As the oil reserves that many Middle Eastern fortunes are built upon are depleted, those with supreme wealth are looking to diversify their assets to ensure their continuing riches. Companies such as Sony, however, appear to welcome the investment.

“We are happy that DIC has recognized the strength of the Sony brand as well as our unique competitive advantage in having both entertainment and electronics assets to drive our businesses forward,” said Sony Corp. CEO Sir Howard Stringer in a prepared statement.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation
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