May 6 (Bloomberg) -- Dubai Holding LLC, the investment group owned by Dubai ruler Sheikh Mohammed bin Rashid al- Maktoum, merged its Dubai Bank and Dubai Islamic Investment Group units to create a $10 billion venture that will buy companies overseas.

The venture, Dubai Banking Group, will be managed by Dubai Group and will focus on buying banks, insurers and other assets in the Middle East, Africa and Asia that comply with Muslim Shariah law, Dubai Holding said in an e-mailed statement today.

Dubai Banking Group will ``aggressively target significant direct investments and acquisitions in a wide range of sectors across the world's biggest Islamic markets,'' Dubai Group Executive Chairman Soud Ba'alawy said in the statement.

Demand for banking products, insurance policies and investments that comply with Muslim Shariah law's ban on interest has increased as oil money floods into the Persian Gulf. The global Islamic finance industry's assets under management are expanding by 15 percent a year and may have topped $1 trillion, according to the Malaysia-based Islamic Financial Services Board.

About 60 percent of all Shariah-compliant assets are owned by Gulf investors, with 20 percent held in Muslim Asia and the rest distributed globally, Moody's Investors Service estimates.

Sheikh's Assets

Ba'alawy last year said Dubai Group manages more than $40 billion for Sheikh Mohammed and plans to create the Gulf's biggest financial-services corporation. Dubai Group is a founding shareholder in Noor Islamic Bank PJSC, which opened Jan. 6 with a five-year plan to expand into the Middle East, Europe, Asia and Africa.

Dubai Islamic Investment Group owns a 51 percent stake in Kuwait-based Islamic insurer al-Fajer Retakaful Insurance Co. KSCC, 40 percent of Bank Islam Malaysia Bhd. and 17 percent of National Bonds U.A.E., according to its Web site. Dubai Bank, in which Emaar Properties PJSC has a 30 percent stake, on April 13 said its first quarter profit quadrupled to $36 million on rising demand for Islamic loans.

Salaam al-Shaksy, who is currently chief executive officer of Dubai Islamic Investment Group, is appointed chief executive officer of Dubai Banking Group, today's statement said.

To contact the reporter on this story: Will McSheehy in Dubai at wmcsheehy@bloomberg.net

Last Updated: May 6, 2008 08:46 EDT