Arabtec to lift share capital of unit

Arabtec shares up marginally following an announcement on plans to raise share capital for its unit Efeco.

Arabtec is to increase the share capital of its mechanical, electrical and plumbing subsidiary by Dh500 million, using the funds raised to grow the business.

Its shares inched up by 1.08 per cent to Dh2.82 each in trading in Dubai after the company’s statement yesterday.

The announcement from the engineering and construction major comes a day after Arabtec said it would create a new unit to venture into property development in the UAE and later in the Middle East and North Africa.

The money raised will be invested in buying equipment and machinery to help Emirates Falcon Electromechanical Company (Efeco) to bid for “higher value projects” besides enabling it to expand into other Arabian Gulf countries as well as North Africa, including Egypt, Arabtec said.

The company, which is building the Louvre on Saadiyat Island, wholly acquired Efeco in October.

The aim is to create a leader and key player in the mechanical, electrical and plumbing sector in the Middle East and North Africa, said Hasan Abdullah Ismaik, the managing director and chief executive of Arabtec. “Efeco already has a strong backlog of over US$1 billion, which we expect to grow substantially.”

In September, Arabtec signed a joint venture with the engineering arm of Samsung to take on complex engineering infrastructure work in the Middle East and North Africa.

The 12-year-old Efeco operates in the UAE, Qatar, Jordan and Saudi Arabia, and Arabtec’s acquisition was seen as a result of strong performance in the Saudi and UAE markets.

On Sunday, Arabtec announced plans to develop property projects in Dubai and Abu Dhabi, with a focus on affordable housing in Saudi Arabia, Egypt, Morocco, Algeria and Iraq.

Arabtec’s shares have climbed more than 50 per cent this year.

Over the past year, the highest price the shares have touched is Dh2.83 on December 15, on the eve of an announcement from the company that it is not taking over the electrical, mechanical and plumbing contractor Drake & Scull International.

There was speculation of a merger following Arabtec’s Dh2.4 billion rights issue aimed at growing the company in summer. The companies work on the Louvre Abu Dhabi project. Following the announcement, share prices fell marginally to Dh2.77.

The construction major’s net income rose to Dh100.8 million in the third quarter, from Dh35m a year earlier.

The company is also building the Midfield Terminal Building in the capital. Depa, listed on Nasdaq Dubai and where Arabtec holds a 24 per cent stake, saw share prices fall 4.76 per cent on Monday to 60 US cents. It opened the year with 35 cents a share.