Business

Lamprell to build in UAE parts for North Sea wind farm

The rig maker won a US$225 million contract to procure, fabricate and supply 60 foundations to ScottishPower Renewables that will be used to install 102 turbines.

LeAnne Graves

27 November, 2016

The London-listed oil services company Lamprell will manufacture in the UAE components for offshore wind turbines in the North Sea, helping to offset downturns in the oil and gas sector.

The rig maker won a US$225 million contract to procure, fabricate and supply 60 foundations to ScottishPower Renewables that will be used to install 102 turbines, each with a capacity of 7 megawatts at the East Anglia One offshore wind farm.

This will generate enough power for more than 500,000 homes a year. The Northern Ireland-based marine construction company Harland & Wolff will undertake assembly for 24 jackets, which will bring 200 jobs to Belfast.

“Our contracting strategy will ensure that over 50 per cent of the overall lifetime investment goes to suppliers in the UK,” said Keith Anderson, the chief executive of ScottishPower Renewables.

This will trickle into work at Lamprell’s yards in Jebel Ali and Sharjah, which will start work in March.

“This project gives us an opportunity to demonstrate how our fabrication skills are once again transferable to other areas of the energy industry and beyond our traditional sweet spot in the oil and gas sector,” said Christopher McDonald, the chief executive of Lamprell.

The oil services company has been hit by the oil price rout that has lasted for more than two years.

Lamprell swung to a loss of $4.4m in its half-year earnings and said last month that it expected the hydrocarbon sector to remain challenging with lower-than-expected revenue for this year.​

While the hydrocarbon sector has taken a beating, the offshore wind sector reached historical highs last year.

More than 3 gigawatts of new offshore wind power capacity was connected to the European grid last year, more than doubling the amount for the previous year and the largest yearly addition of capacity to date, according to the European Wind Energy Association.

lgraves@thenational.ae

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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.”

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