Egypt's Orascom Construction shares rise in ADX trading debut

Company delists its shares from Nasdaq Dubai to move to Abu Dhabi

Osama Bishai, chief executive of Orascom Construction, centre, with Abdulla Al Nuaimi, chief executive of Abu Dhabi Securities Exchange, right, and ADX chairman Ghanem Al Mazrouei, during the Orascom listing ceremony at ADX on Thursday. Victor Besa / The NationalShow less

Orascom Construction's shares rose as much as 45 per cent on its trading debut on the Abu Dhabi Securities Exchange (ADX) on Thursday amid higher demand from investors.

Shares of the company settled 26 per cent higher at Dh38.1 each at the close of trading in Abu Dhabi, giving Orascom a market value of about Dh4.2 billion ($1.14 billion).

Orascom made its debut on ADX after delisting from Nasdaq Dubai. It is also moving its office from Dubai International Financial Centre to Abu Dhabi's ADGM.

Orascom Construction is a contractor primarily focused on infrastructure, industrial and high-end commercial projects in the Middle East, Africa and the US. It also owns 50 per cent of Besix Group, a company specialising in construction, infrastructure and marine works.

The company’s secondary listing on the Egyptian Exchange (EGX), however, remains unchanged.

The Abu Dhabi listing is “more appropriate for us because that's where we are going to continue to work and invest”, Osama Bishai, chief executive of Orascom Construction told The National.

“Also it's more appropriate for our long-term vision of investment in infrastructure.”

The company is involved in the construction of a large-scale water treatment project in Abu Dhabi.

The project comprises a seawater nanofiltration plant with capacity of 522,000 cubic metres per day, a transfer pump station, 70km of water transmission pipelines with two delivery points, and an in-field distribution network of 230km, according to Orascom's website.

The project is being built in partnership with Adnoc and Taqa under a 30-year build–own–operate–transfer (BOOT) scheme.

Orascom Construction was listed on ADX on Thursday. Victor Besa / The National

“We would like to continue doing this type of model of business with Adnoc and with other government clients, and also we are discussing with some investors infrastructure work to do strictly as a contractor," Mr Bishai said.

The company had a contract backlog of $9.6 billion at the end of June, with Egypt dominating the total contract value at 53 per cent, followed by the US at about 28 per cent and Saudi Arabia at 12 per cent.

In the first half of this year, the company reported a 26.5 per cent annual increase in its net profit attributable to shareholders to $82.7 million, on the back of a rise of more than 32 per cent in its revenue to $1.95 billion, according to its financial statement.

“We have announced a record backlog on June 30. So it is the time now to focus on our backlog and make sure that it is delivered efficiently and even improved, from a bottom line perspective,” Mr Bishai said.

Saudi Arabia expansion

The company is also focusing on Saudi Arabia as part of its expansion plans in the region. It is building a 3 gigawatts power plant in the kingdom and is in discussions to start another one, Mr Bishai said.

Orascom is also in talks to construct water projects in the Arab world's largest economy. "We are focused in Saudi on essential infrastructure," he said, without providing further details.

Saudi Arabia is spending heavily on developing infrastructure and launching projects as it focuses on diversifying its economy away from oil.

UAE listing boom continues

The new listing on ADX comes as the UAE's capital markets continue to record strong investor demand amid government efforts to boost the equity markets.

There were seven initial public offerings across the country last year, including by Talabat Holding, retailer Lulu Group, ADNH Catering, NMDC Energy and Alef Education. IPOs in the UAE accounted for 47 per cent, or $6.2 billion, of total stock launch proceeds in the Gulf region last year, according to PwC data.

The IPO momentum continued this year with the listing of Alpha Data on ADX and Dubai Residential Reit on the Dubai Financial Market.

Alpha Data, a UAE technology company, raised $163 million from its offering, while Dubai Residential Reit's IPO size reached $584 million.