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Dubai is taking decisive steps to further cement its financial stability. At the heart of this strategy lies a renewed focus on sovereign funds.

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has established the Dubai Investment Fund, an independent public entity to drive investments in strategically important projects and take on responsibility for investing the emirate’s government funds, surpluses and the general reserve locally and internationally.

The newly formed fund will hold significant stakes in key entities that have been privatized in recent years, including utility giant DEWA, toll operator Salik, and Dubai Taxi Company. The move follows Dubai’s successful privatization of a handful of companies last year, raising $8.5 billion.

DEWA raised $6.1 billion in an initial public offering last year. After pausing initial public offerings for most of this year, the emirate in November floated Dubai Taxi, raising $315 million for a 25% stake in the city’s taxi service.

Abdulaziz Mohammed Al Mulla was appointed the fund’s managing director and chief executive officer, the Dubai Media Office said.

The fund will replace the Dubai government as owner of shares in companies, taking over all contracts, agreements, commitments, deposits, bank accounts, and loans associated with such shares.

The announcement marks a significant step in the emirate’s economic diversification strategy. 

“The fund also seeks to bolster the financial stability of the Dubai Government by financing the government’s deficit and establishing strong financial reserves, thereby promoting long-term financial sustainability,” Dubai media office said.

Dubai already possesses a sovereign fund, the $320 billion Investment Corporation of Dubai, which saw its profit surge by more than 91% in the first half of the year, driven by growth across all business segments.