Nov. 26 (Bloomberg) -- Dubai International Capital LLC, the $13 billion fund manager whose investors include the emirate's ruler, bought shares in Sony Corp. in its first investment in a Japanese company.

The stake purchased was ``substantial,'' Dubai International, which last week disclosed it planned to invest $500 million in a Japanese company, said in an e-mailed statement today. Officials at Dubai International and Tokyo-based Sony, the world's second- largest maker of consumer electronics, declined to comment on financial terms of the purchase.

Dubai International added Sony to a portfolio that includes European Aeronautic, Defence & Space Co. and HSBC Holdings Plc as the second-biggest sheikhdom in the United Arab Emirates seeks to diversify its sources of income away from real estate and oil. The investment firm plans to almost double its assets by mid-2009.

``This kind of new government-related funds buying Japanese stocks is encouraging,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo. ``Some investors may jump on it.''

Sony rose 4.6 percent, its biggest gain in a month, to close at 5,500 yen on the Tokyo Stock Exchange. The stock was the second-biggest contributor to the Nikkei 225 Stock Average's 1.7 percent advance today.

``Sony has a great management team,'' Anand Krishnan, Dubai International's chief operating officer, said in a phone interview from the emirate today, declining to comment on the size of the investment. ``We like their leadership position in electronics and their strong presence in emerging markets.''

$500 Million Purchase

Sameer al-Ansari, Dubai International's chief executive officer, on Nov. 19 said he planned to buy a $500 million stake in a ``Japanese-headquartered company we like very much,'' without naming the company.

$500 million would buy 1 percent of Sony, based on today's closing price. Moxley & Co. is the Japanese company's biggest investor with a 17.6 percent stake, followed by Master Trust Bank of Japan Ltd.'s 4.8 percent, according to the company's latest annual report.

Sony last month reported its highest profit in three quarters as sales of Cyber-shot cameras helped earnings at the main consumer electronics division jump 13-fold. Net income in the fiscal year ending March 2008 is poised to more than double to a record 327.6 billion yen, according to the average of 21 analyst estimates compiled by Bloomberg.

Sony is ``pleased'' by the investment, said Atsuo Omagari, a spokesman at the Japanese company.

500 Biggest Companies

Controlled by Sheikh Mohammed bin Rashid al-Maktoum, Dubai International has spent more than $10 billion on overseas investments since its 2004 debut. Dubai is using cash generated by a property boom and state companies such as Emirates airline and port operator DP World Ltd. to diversify its sources of income with international corporate holdings.

The asset manager last month agreed to buy a $1.26 billion stake in New York-based hedge fund Och-Ziff Capital Management Group LLC and has backed billionaire Richard Branson's bid to buy U.K. mortgage lender Northern Rock Plc. Past acquisitions include Tussauds Group and Travelodge Hotels.

Dubai International's equities fund buys stakes of $500 million to $1.5 billion from the world's 500 biggest publicly traded companies when it perceives a stock to be undervalued, Krishnan said. It typically holds the stock for up to five years and targets annual returns of 15 percent for investors, he said.

Third Investment

Sony is the third investment for the $2 billion Global Strategic Equities Fund, which earlier this year bought stakes in EADS and HSBC, according to today's statement.

Dubai International will host a group of Asian companies in Dubai next month to discuss investments in their companies, according to its Web site. Sony advisory board chairman Nobuyuki Idei will speak at the event, and companies scheduled to give presentations include DBS Group Holdings Ltd., Bharti Airtel Ltd., Hong Leong Financial Group Bhd., Aluminium Corp. of China Ltd. and South Korea's Samsung Electronics Co.

``We will certainly look at the companies at the conference,'' Krishnan said. ``We've not decided on any of them yet.''

To contact the reporters on this story: Will McSheehy in Dubai at wmcsheehy@bloomberg.net; Hiroshi Suzuki in Tokyo at hsuzuki5@bloomberg.net.

Last Updated: November 26, 2007 05:34 EST