While dozens of laborers go about their business on the sprawling property next to the fine sands of Al Mamzar Beach, local authorities are struggling to protect the mansion and the rest of the estate of Majid Al Futtaim, the late patriarch of a shopping and entertainment empire that is an anchor from is Dubai’s economy.
A residential villa under construction in the Al Mamzar beach district in Dubai, United Arab Emirates. Family businesses have been vital to the emirate’s development, and a chaotic succession plan risks distraction and disruption as the region seeks to shift its economy away from oil dependence.
“With so many other large, family-owned conglomerates in Dubai, the stakes are too high for succession disputes to get out of hand,” said Christopher Davidson, associate fellow at the Henry Jackson Society.
Al Futtaim’s legacy remained unclear when the octogenarian died in December. While the villa was intended as a residence for him and his third wife, the heart of the property is Majid Al Futtaim Holding.
The company controls $16.5 billion in assets, including a renowned indoor ski resort, the opulent Mall of the Emirates and the Carrefour hypermarket franchise in the Middle East. It is active in 17 countries and extends to Africa. Investors also hold around $3.7 billion in corporate debt.
Shoppers visit the Mall of Emirates shopping complex operated by Majid Al Futtaim Holding LLC in Dubai, United Arab Emirates. MAF is now in transition to multiple ownership, and that process could lay the groundwork for broader changes, according to people familiar with the discussions.
Options include the sale of parts of the group, an investment through a sovereign wealth fund and a public listing, said the people, who asked not to be identified because the talks are private. No decisions are forthcoming, it said.
The process will take time as the family and company try to avoid disruption and the emirate seeks to maintain its reputation as a relatively safe haven amid the geopolitical turmoil fueled by the war in Ukraine.
To oversee potential disputes, Dubai’s leader Sheikh Mohammed bin Rashid Al Maktoum appointed a special Judiciary Committee, a relatively rare event reserved for high-profile cases. The panel is headed by Essa Kazim, chairman of the group that operates Dubai’s stock exchange.
Ten people, including three wives, a son and six daughters, are entitled to the estate, which was valued at $6.1 billion at the time of Al Futtaim’s death, according to the Bloomberg Billionaires Index.
The prospect of a MAF listing fits Dubai’s interest in encouraging family-run groups to strengthen the local stock market.
Shares in MAF have been decided and registered and a shareholders’ meeting is being arranged for nine family members after Al Futtaim’s Abu Dhabi wife transferred her stake to her daughters. None of the heirs have played a role in the group other than Tariq Al Futtaim, the only surviving son and a board member since 2011.
“The company will continue as before,” said Habib Al Mulla, lawyer for Tariq and his family, adding that Tariq’s goal is to remain on the board. “It had one owner, and now it has nine owners.”
Much work is being done to catalogue, appraise and distribute Al Futtaim’s personal belongings such as airplanes and boats in various locations. Overall, according to Al Mulla, the inheritance talks should last at least a year.
“At this point, I think it’s premature to talk about an IPO or a sale of shares or anything like that,” he said.
The entrance to a Carrefour SA supermarket in Dubai, United Arab Emirates. MAF, which has been run by professional managers for years, said it has “a clear and comprehensive business continuity plan” and is pursuing its expansion strategy. It added that no decisions have been made regarding a future listing or sale of shares.
“Like any prudent company, we will continually review our operations and respond appropriately to changing market conditions,” the company said in an emailed statement to Bloomberg. The intent is to ensure that “we are fit for purpose and well positioned to capitalize on growth opportunities and better serve our customers.”
Marriage ties to other prominent families in the United Arab Emirates complicate the question of MAF’s future direction. The heirs have come together in four groups. One sits around Tariq and his family in Dubai, the other in Abu Dhabi. Two people, including Al Futtaim’s third wife, have their own lawyers. Representatives of 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, who were given control of certain sectors in exchange for support. But as the economy opens up, the system comes under pressure. The emirate has set up a special inheritance court to resolve potential conflicts.
Al Futtaim founded the company in the 1990s with funds raised from an inheritance dispute with his cousin. His venture was the first to combine shopping and entertainment – a formula that draws crowds in the hot summer months and is expanding to Cairo and Riyadh.
Under Islamic law, Tariq would end up owning the largest single stake – two other sons died in separate boating-related incidents. The exact distribution of the holdings among the shareholder groups was not disclosed.
According to Omar Alghanim, head of a network representing family businesses, the emirate is improving continuity by encouraging family businesses to act early so employees, bankers and local officials are not left behind.
“You have the systemic risk that’s spread throughout the system and it’s really becoming more of an issue,” he said.