Drake seeks passage to India to capitalise on spending boom



Drake & Scull, the construction and engineering firm based in Dubai, is looking for a partner in India as it seeks to capitalise on the country's growing market. The company is in talks with "three or four" companies in India, where the government has set aside US$365 billion (Dh1.34 trillion) for infrastructure spending this year alone, said Khaldoun Tabari, its chief executive.

"We are looking at an entry point, either a joint venture with a company or to organically grow with a family company in India," he said. "There are a lot of projects there now." Drake & Scull has been rapidly expanding overseas in order to beat the downturn in the UAE, where it is owed about Dh1bn by clients. Contractors have struggled to collect on debts as developers deal with tighter liquidity, although Mr Tabari said that "things have improved" compared with a year ago.

"Everyone is having trouble getting paid," he said. "But now people don't venture into a building project unless they know where the money is coming from." Closer to home, Drake will spend Dh700 million to buy Saudi Arabian companies - a mechanical, engineering and plumbing business as well as a civil-works firm. Both acquisitions are expected to be finalised by early next quarter. The acquisitions will be 50 per cent funded by the company's own cash, while the rest will be borrowed from banks.

"Our treasury is working with banks to put a financial package in place," said Mr Tabari. Drake, which this week won Dh240m worth of contracts in Abu Dhabi, is also on the verge of being awarded a civil works deal for a 40-storey building in Jeddah, said Mr Tabari. The new contracts will help to boost the company's project backlog to an estimated D6bn by the end of this year. Its order book totalled Dh4bn at the end of the first quarter, compared with Dh2.7bn at the same time last year.

It is also awaiting news on Dh5.5bn worth of bids in Abu Dhabi. "It's an 18-month process in Abu Dhabi, from the time you bid until ground-breaking," said Tawfiq Abu Soud, an executive director at Drake. "We're still waiting for a decision from clients on what we bid for last year." @Email:agiuffrida@thenational.ae

COMPANY PROFILE

Name: SmartCrowd
Started: 2018
Founder: Siddiq Farid and Musfique Ahmed
Based: Dubai
Sector: FinTech / PropTech
Initial investment: $650,000
Current number of staff: 35
Investment stage: Series A
Investors: Various institutional investors and notable angel investors (500 MENA, Shurooq, Mada, Seedstar, Tricap)

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

3 Body Problem

Creators: David Benioff, D B Weiss, Alexander Woo

Starring: Benedict Wong, Jess Hong, Jovan Adepo, Eiza Gonzalez, John Bradley, Alex Sharp

Rating: 3/5

Company name: Farmin

Date started: March 2019

Founder: Dr Ali Al Hammadi 

Based: Abu Dhabi

Sector: AgriTech

Initial investment: None to date

Partners/Incubators: UAE Space Agency/Krypto Labs 

A QUIET PLACE

Starring: Lupita Nyong'o, Joseph Quinn, Djimon Hounsou

Director: Michael Sarnoski

Rating: 4/5

The Specs

Engine: 1.6-litre 4-cylinder petrol
Power: 118hp
Torque: 149Nm
Transmission: Six-speed automatic
Price: From Dh61,500
On sale: Now

Company profile

Company name: Xare 

Started: January 18, 2021 

Founders: Padmini Gupta, Milind Singh, Mandeep Singh 

Based: Dubai 

Sector: FinTech 

Funds Raised: $10 million 

Current number of staff: 28 

Investment stage: undisclosed

Investors: MS&AD Ventures, Middle East Venture Partners, Astra Amco, the Dubai International Financial Centre, Fintech Fund, 500 Startups, Khwarizmi Ventures, and Phoenician Funds

UAE athletes heading to Paris 2024

Equestrian

Abdullah Humaid Al Muhairi, Abdullah Al Marri, Omar Al Marzooqi, Salem Al Suwaidi, and Ali Al Karbi (four to be selected).

Judo
Men: Narmandakh Bayanmunkh (66kg), Nugzari Tatalashvili (81kg), Aram Grigorian (90kg), Dzhafar Kostoev (100kg), Magomedomar Magomedomarov (+100kg); women's Khorloodoi Bishrelt (52kg).

Cycling
Safia Al Sayegh (women's road race).

Swimming

Men: Yousef Rashid Al Matroushi (100m freestyle); women: Maha Abdullah Al Shehi (200m freestyle).

Athletics

Maryam Mohammed Al Farsi (women's 100 metres).

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.


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