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Dubai bids for troubled Spanish real estate company

The Investment Corporation of Dubai has made a €3 billion offer for Inmobiliaria Colonial, in what would be the sovereign wealth fund’s first major move into overseas markets.

The sovereign wealth fund of Dubai is hoping to venture into Spain’s real estate market after making a conditional offer for the embattled real estate company Inmobiliaria Colonial.

The Investment Corporation of Dubai has offered about €3 billion ($4.5 billion) for the company, the value of which has more than halved in six months.

It would be a significant overseas investment for the Investment Corporation of Dubai, which has focused much of its real estate portfolio in the Middle East.

In an offer letter to Colonial, the Dubai fund said it would pay €1.85 per share to gain control of at least 50.1 percent of the company, mixed with debt worth €2.25 a share, before bidding for the whole company in accordance with Spanish takeover regulations.

The sovereign wealth fund was established in 2006 to manage investments of the Dubai Government’s finance department, including Emaar Properties and the Dubai World Trade Centre.

According to press reports, the former chairman of Colonial, Luis Portillo, and the Nozaleda family, who together own about 52 percent of the Spanish company, had agreed to sell their stock to the Dubai fund in the event of a bid. Colonial's assets are valued at more than €12 billion, according to its website, mostly from rented office space in Madrid, Barcelona and Paris with some Spanish residential investments. It is carrying about €9 billion of debt, the reports added.

The Investment Corporation of Dubai was unavailable for comment at the time of going to press.