Taqa deal offers hope for share price rise

Investors urged to recall solid track record of company

Abu Dhabi National Energy Company needs to reverse its share-price decline, and its latest acquisition could be enough to remind investors of its solid track record of investing in companies with good pedigrees. The company known as Taqa said yesterday it would pay its major shareholder, Abu Dhabi Water and Electricity Authority (ADWEA), US$400 million to buy out its 40 per cent stake in Oman's Sohar Aluminium.

Taqa's announcement came just days after it agreed to buy natural gas properties from Canada's Suncor Energy for about C$285m. Analysts say Taqa's latest moves fit its pattern of expanding through the acquisition of strategic assets. Sohar is 40 per cent owned by Oman's state-owned oil and petrochemical investment company, Oman Oil, while the rest is held by the Canadian firm Rio Tinto Alcan. It has "good parentage", said Faisal Hasan, the head of research at Global Investment House in Kuwait.

Mr Hasan said the deal would not stress Taqa's financial resources and would give the company exposure to a good regional asset. The deal is likely to be a focus of attention for investors today when they come to the floor for the last trading session of the week. Taqa shares have taken a beating recently and hit a 52-week low of Dh1.06 in the first week of this month. They closed yesterday 0.9 per cent lower at Dh1.09 in a broadly negative Abu Dhabi market.

"The fall in Taqa shares has got to do with the general market conditions and not the company," Mr Hasan said. "Investors feel they are more secure holding on to the cash until second-quarter results are out. Once this happens, we expect positive momentum in shares such as Taqa." The company's first-quarter net profit stood at Dh287m, compared with Dh40m a year earlier, beating most analysts' forecast.