Billionaire’s abrupt death leaves Dubai to untangle messy inheritance

Dubai: In a particularly exclusive corner of Dubai, a modern-day palace with moorish arches and an imposing gateway is rising from the desert, despite uncertainty over who will live there.

As dozens of workers bustle on the sprawling lot adjacent to the fine sand of Al Mamzar beach, local authorities are agonising over the villa and the rest of the estate of Majid Al Futtaim, the deceased patriarch of a shopping and entertainment empire that’s an anchor of Dubai’s economy.

Family-owned companies have been crucial to the emirate’s development, and a messy succession plan risks distraction and disruption just as the region looks to broaden its economy away from a reliance on oil.

“With so many other major family-owned conglomerates in Dubai, the stakes are too high to let such succession disputes bubble over,” said Christopher Davidson, associate fellow at the Henry Jackson Society.

Al Futtaim’s inheritance was left unresolved when the octogenarian died in December. While the villa was intended as a residence for him and his third wife, the centrepiece of the estate is Majid Al Futtaim Holding.

The company controls $16.5 billion in assets including a renowned indoor ski hall, the opulent Mall of the Emirates and the Carrefour hypermarket franchise in the Middle East. It has activities in 17 countries, extending into Africa. Investors also hold some $3.7 billion in corporate debt.

MAF is now in transition to multiple owners and that process could lay the groundwork for more sweeping changes, according to people familiar with the discussions.

Options include selling parts of the group, an investment by a sovereign wealth fund and a public listing, said the people, who asked not to be identified because the discussions are private. No decisions are imminent, they said.

The process will take time as the family and the company seek to avoid disruption and the emirate looks to retain its reputation as a relative safe haven amid the geopolitical turmoil stoked by war in Ukraine.

To oversee any potential disputes, Dubai’s leader Sheikh Mohammed bin Rashid Al Maktoum appointed a special judicial committee, a relatively rare occurrence reserved for high-profile cases. The body is headed by Essa Kazim, chairman of the group that runs Dubai’s stock exchange.

Ten people, including three wives, one son and six daughters, have claims on the estate, which was estimated to be worth $6.1 billion at the time of Al Futtaim’s death, according to the Bloomberg Billionaires Index.

The prospect of an MAF listing dovetails with Dubai’s interest in encouraging family-owned groups to bolster the local stock market.

The stakes in MAF have been decided and registered, and a shareholder meeting is being arranged for nine family members after Al Futtaim’s wife from Abu Dhabi transferred her holding to her daughters. None of the heirs aside from Tariq Al Futtaim, the sole surviving son and a board member since 2011, have played a role in the group.

“The company will continue to run as it has been running,” said Habib Al Mulla, the lawyer for Tariq and his family, adding that Tariq’s goal is to remain a board member. “It had one owner, and now it has nine owners.” There is a lot of work being done on cataloging, evaluating and distributing Al Futtaim’s personal assets such as planes and boats in various locations. All told, the inheritance talks are likely to take at least a year, according to Al Mulla.

“At this point in time, I think it’s too premature to talk about any IPO or stake sale or anything,” he said.

MAF, which has been run by professional managers for years, said it has “a clear and comprehensive plan for maintaining normal operations” and pursuing its expansion strategy. It added that no decisions have been taken on any future listing or stake sales.

“Like any prudent business, we will continuously review our operations and will respond appropriately to any changing market conditions,” the company said in an e-mailed statement to Bloomberg. The intention is to ensure “we are fit-for-purpose and well-positioned to capture growth opportunities and serve our customers better.” Marriage links to other prominent families in the United Arab Emirates complicates issues over MAF’s future direction. The heirs have coalesced into four groups. One is based in Dubai around Tariq and his family, and another in Abu Dhabi. Two individuals, including Al Futtaim’s third wife, have their own lawyers. Representatives for the other three groups declined to comment.

Like few companies, MAF represents Dubai’s remarkable growth but also its fragility. Rulers relied on merchant families, which were given control over certain sectors in exchange for support. But as the economy opens up, the system is under strain. To deal with potential conflicts, the emirate has set up a special inheritance court.

Al Futtaim founded the business in the 1990s with funds from a succession dispute with his cousin. His company was the first to combine shopping and entertainment — a formula that attracts droves during the steamy summer months and is being expanded to Cairo and Riyadh.

Under Islamic law, Tariq would end up owning the biggest single stake — two other sons died in separate boating-related incidents. The exact distribution of the holdings between the shareholder groups hasn’t been disclosed.

The emirate is in the process of making continuity smoother by prodding family businesses to act ahead of time, so employees, bankers and local officials aren’t left in the lurch, according to Omar Alghanim, head of a network that represents family businesses.

“You have the systemic risk that runs across the system, and it’s something that really is becoming more and more of an issue,” he said.