Amid Debt Crisis, David Jackson of Dubai World’s Istithmar Resigns

(January 21, 2010) — David Jackson has resigned as CEO of Istithmar World and was replaced by the company’s chief investment officer, Andy Watson.Watson, previously a director with Barclays Capital, assumes his new role immediately.

Dubai World said Jackson had left the company to “pursue other opportunities.” His resignation comes as the troubled government-owned conglomerate grapples to renegotiate about $22 billion of debt.

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“Today, Istithmar World is focused on the steady-state management of existing assets to maximize value rather than on private equity investment,” Dubai World Chief Restructuring Officer Aidan Birkett said in a statement, according to The Wall Street Journal.

Jackson, a Wall Street veteran, joined the private equity unit Istithmar World in 2003 as its chief investment officer, earning a position as chief executive in 2006. Since 2003, Istithmar World has spent nearly $20 billion on a range of investments, using less than $3 billion in cash and the remaining in borrowed capital, The Wall Street Journal reported. Some of Istithmar World’s investments made under Jackson’s guidance include deals for Perella Weinberg Partners and Cirque du Soleil.

While at Dubai World, Jackson was instrumental in elevating the reputation and image of the company, with investments like the $942.3 million purchase of the upscale retailer Barneys New York. Other high-end property acquisitions under Jackson’s leadership included Mandarin Oriental Hotel and Fontainebleau Hotel, site of the James Bond “Goldfinger” film.
Jackson’s exit from Dubai World reflects a trend of high-profile executives departing from Dubai’s top corporations as the emirate deals with the blows of the financial crisis.

(January 20, 2010) – In 2009, CalPERS’ portfolio earned 11.8% in returns, falling behind its internal benchmark of 21.2%, which is based on the performance of investments similar to what the fund owns. In the last three years, CalPERS has suffered losses in real estate and in private equity investments, putting a strain on California’s giant public pension fund to cover the cost of retirement for 1.6 million state and local government workers, retirees and their families, the Los Angeles Times reported.

The fund’s underperformance was largely based on declining real estate holdings, which plunged 47.5% in 2009 compared to a 15.4% drop for CalPERS’ benchmark index of real estate investment returns. Still, CalPERS’ portfolio rose in value for the year. Its assets increased to $203.3 billion at the end of December, from $183.3 billion, still behind its peak of $253 billion in 2007, according to the Financial News.

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The fund’s private equity investments have come under scrutiny recently, with reports that over the last decade, middlemen have been paid $125 million from private investment funds for arranging deals with CalPERS. The intermediaries helped managers secure pieces of the fund giant’s portfolio.
CalPERS has about 54% of its assets in stocks. Most of the remaining assets are in bonds, real estate and private equity investments, according to the Los Angeles Times.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742