Government of Dubai fund eyes Colonial

Spanish property group Inmobiliaria Colonial said on Thursday that it has received a letter of interest from the investment fund of the government of Dubai, Investment Corporation of Dubai (ICD), regarding the possible acquisition of Juan Carlos Nozaleda's and Luis Manual Portillo's stakes in the troubled property group.

In a statement to the Spanish stock market regulator, the heavily-indebted company said that in the event the deal went ahead, ICD would launch a takeover bid in accordance with Spanish regulations. Colonial added that its board is studying the bid approach.

Portillo is Colonial's largest shareholder with around 40% of the company, while Nozaleda has a 12.31% interest.

Colonial has been the focus of takeover speculation after its shares plunged 51% last month in the face of lowering property values and banks' disinclination to lend in the current market crisis. The company had previously confirmed merger talks with French property group Gecina and GE Real Estate, the property arm of General Electric.

Shares in Colonial surged 6.2% to EUR 1.71 in early afternoon trading in Madrid.