The Arabian General Investment Corporation (Agico) continued its return to financial health last year, reporting nearly an eightfold rise in net profits to AED 8.9 million ($2.4 million). The Dubai-based investment company made a small pre-tax loss in 1996, but contributions from minority interests enabled it to report net profit of AED 1 million ($272,000).

Agico, which invests in the Arab world and the West, suffered losses on European assets in the early 1990s which were carried on its balance sheet until the company shrunk its capital in 1996 in order to get rid of them, buying out thousands of small-scale Arab investors at the same time.

Agico is planning to raise fresh capital from UAE investors to bring it into compliance with local laws, which require companies to be 51 per cent locally owned. The company is listed in Kuwait and traded in the UAE.

Agico's general manager Iyad Duwaji says the company is shifting its focus towards investment in the Arab world. It still owns a hotel in Spain, where renovation work should finish this year. 'We will hold the asset until we can realise its full value,' says Duwaji. During 1997, Agico made some money from selling investments in Turkey and Egypt and bought a third of the shares in an Egyptian packaging firm, Rotopack, for $4.6 million. It has also built up a portfolio of Arab and global securities and taken a 5 per cent stake in Jordan Investment Trust (Jordinvest), a new firm set up by Arab financier Faisal Kudsi and Said Nabulsi, a former governor of Jordan's central bank (MEED 4:7:97).

Agico is heavily capitalised: shareholders' equity stood at AED 260.6 million ($71.0 million) at the end of 1997, compared to assets of AED 487.8 million ($133.0 million). Duwaji says the company could now increase its borrowings. 'We certainly hope to build up more leverage now that things are straightened out. We didn't need to before because we had a lot of cash.'