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MULTIPLE ACQUISITIONS PLANNED

Arabtec AGM

Arabtec to list shares of building unit in Abu Dhabi

Dubai, April 30, 2014

Dubai contractor Arabtec Holding plans to list a portion of its construction unit in an initial public offering (IPO) on the Abu Dhabi bourse next year, the group chief executive said on Wednesday.

IPOs dried up in the UAE when its financial crisis erupted five years ago but a recovery in the economy, especially in Dubai, has led to some firms announcing plans to list shares in the coming months.

Arabtec, in which Abu Dhabi state fund Aabar owns a major stake, is trying to evolve from a local contractor into a multinational development company as its finances are boosted by a recovery in Dubai's property market.

CEO Hasan Ismaik said the plan was to float about 40 percent of the company's construction subsidiary, which he valued at 10 billion dirhams ($2.7 billion).

Dubai-listed Arabtec announced plans in February to set up five new subsidiaries to focus on areas including new geographic markets, the real estate sector and infrastructure projects.

Ismaik, speaking at a press conference after the company's annual shareholders meeting in Abu Dhabi, added Arabtec also had plans to list parts of the firm on the London, Hong Kong and U.S. markets in the coming years, but did not elaborate.

The contractor, which built the emirate's famous palm islands, would also engage in multiple acquisitions and mergers by 2018, Ismaik said without giving any more details.

He however denied that it planned to acquire Kuwaiti construction firm Kharafi National. Sources had said the company was in talks to fully acquire the Kuwaiti firm.

At the shareholder meeting, the company's board scrapped previous plans for a cash dividend to shareholders for 2013 and raised its stock dividend to 40 percent.

The company's board had earlier proposed a cash dividend of 0.1 dirhams ($0.03) per share plus bonus shares worth 30 percent of its share capital.

Ismaik noted that the company will push ahead with its plans for organic and geographical diversification to mitigate risks.

“We are planning to do a series of acquisitions and mergers with global leaders in the targeted areas. This will go in tandem with streamlining and upgrading our internal organization and attracting the top notch professionals from around the world. We have unshaken confidence in our shareholders’ loyalty and commitment, and we in the Board of Directors believe that, with the help the Almighty God, we will achieve the aspired goals,” Ismaik added.

2013 financial performance

Arabtec reported strong financial performance in 2013, with a net profit attributable to parent of Dh377 million ($102.6 million), marking an increase of 171 per cent on 2012. The company has also posted superb results during the first quarter, with backlog skyrocketing to over Dh200 billion, after a series of new contract wins to the tune of Dh188 billion.

The company has posted a significant increase in project backlog, totalling Dh24.1 billion in value at year end 2013, a 22 per cent increase from the prior year.

The company reported revenues up 30 per cent to Dh7.4 billion in 2013, compared to Dh5.7 billion in 2012. Revenues were driven by the Company’s growing backlog and continued strong performance in the UAE and Saudi Arabia markets, in addition to management’s influence on the project delivery organisation.

Moreover, the company’s gross margins improved, increasing from 10 per cent in 2012 to 12 per cent in 2013 driven by a continued focus on project execution. – TradeArabia News Service & Reuters




Tags: IPO | Arabtec | dividend |

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