UAE cable maker Ducab may consider IPO to support future expansion

Exclusive: Company aims to surpass last year's revenue growth of 19 per cent amid the emergence of new business opportunities, its group chief executive says

Global demand for cables continues to grow on the back of new infrastructure projects, Ducab's group chief executive Mohammed Al Mutawa says. Victor Besa / The National

UAE cable maker Ducab may consider an initial public offering to support future expansion, its group chief executive has said.

“This is a viable strategy going forward in order to basically fuel our expansion plans … it’s an option that is available for us,” Mohammed Al Mutawa told The National in an interview.

The company, jointly owned by Abu Dhabi holding company ADQ and the Investment Corporation of Dubai, has no plans to sell shares in the company at the moment, he said.

There has been an IPO boom in the Middle East, with a number of companies listing their shares on the regional stock markets such as the Abu Dhabi Securities Exchange, the Dubai Financial Market and Saudi Arabia’s Tadawul as economies recover from the coronavirus-induced slowdown on the back of higher oil prices and government reforms.

The recent listings include Adnoc Gas, Adnoc Logistics and Services and Al Ansari Financial Services.

Middle East IPOs raised more than $23 billion in 2022 from 48 listings, compared with $7.52 billion from 20 offerings in the previous year.

That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.

Ducab, founded in 1979, produces copper and aluminium cables, as well as metal rods that are used in a number of sectors such as power, oil and gas, construction, renewables and rail.

It has six manufacturing units in the UAE, including four in Abu Dhabi and two in Dubai, in Jebel Ali.

Ducab intends to focus on boosting its exports in international markets, to tap into the expanding global wires and cables market, Mr Al Mutawa said.

The size of the market was estimated at $202.05 billion in 2022 and is expected to expand by 4.2 per cent annually between 2023 and 2030 due to rising urbanisation and growing infrastructure worldwide, according to the Grand View Research report.

Ducab's cable manufacturing unit in Jebel Ali. Victor Besa / The National

Ducab currently has the capacity to produce about 120,000 tonnes of copper cables, 180,000 tonnes of copper rods and 55,000 tonnes of aluminium rods.

It exports to 55 countries and territories, with Hong Kong, the UK, Australia and countries in the GCC and North Africa being its biggest markets.

The company aims to increase exports to other countries in Asia, North Africa and Europe.

“Overall, global demand, when it comes to cable is always there. There are opportunities and pockets all over the world because of new infrastructure projects and other developments,” Mr Al Mutawa said.

“European requirements, for example, for improving the existing grid – the demand is tremendous.”

Europe is building new renewable energy plants as it looks to wean itself off Russian fossil fuels amid the Ukraine conflict, leading to higher demand for cables.

Ducab also aims to aggressively expand its business in India after it opened its office in Bengaluru earlier this year.

“Our office in India has provided us access to the market and within the short period, we have seen a very high level of acceptance for Ducab within the market itself that's growing,” he said.

India, the world's fifth-largest economy, is investing heavily in developing infrastructure projects as its economy makes a strong rebound from Covid-19.

The country is building new roads, power projects, airports and ports.

Last year's signing of the comprehensive economic partnership agreement (Cepa) between the UAE and India is also expected to boost Ducab's exports to Asia's third-largest economy, he said.

Non-oil trade between the UAE and India stood at $50.5 billion, up 5.8 per cent annually, in the first 12 months of the signing of the Cepa between the two countries, the latest data shows.

“We see the opportunities in specialised sectors such as nuclear plants, airports, data centres and infrastructure,” Mr Al Mutawa said.

Ducab is bullish about the growth of the revenue this year.

In 2023, it aims to beat last year's revenue growth of 19 per cent amid new opportunities to increase exports globally.

It currently exports 70 per cent of its products to various international markets while the UAE accounts for 30 per cent of its sales.

“We are expecting a much better result this year and [expect to] surpass last year’s revenue growth,” he said.

The group reported total annual revenue of $1.8 billion in 2022.

The company is supporting the UAE’s “Operation 300bn” initiative that aims to boost the industrial sector's contribution to the country's gross domestic product to Dh300 billion ($81.68 billion) by 2031, from Dh133 billion in 2021.

The Emirates is putting “phenomenal effort … to support the 'Made in UAE' initiative and actually pushing it to the market and challenging us as a UAE manufacturer to represent and take the UAE brand into the world and be an ambassador for the UAE”.

When asked about raising money through the issuance of sukuk or bonds, Mr Al Mutawa said the company had an “ambitious plan to drive the business and take it forward and that would require finance and funding”.

“So, it is always a tool and an option for us to achieve our targets and objectives going forward,” he said, without providing further details.