Al Habtoor seeks Saudi business

Al Habtoor Leighton is in talks to form a partnership in Saudi Arabia as it seeks to expand its business in the kingdom and shelter from the slowdown in the Emirates.

A labourer works at Dar Al-Arkan's Al Qasr project construction site in Riyadh October 25, 2009.     REUTERS/Fahad Shadeed   (SAUDI ARABIA BUSINESS CONSTRUCTION)

Al Habtoor Leighton is in talks with two construction firms to form a partnership in Saudi Arabia as it seeks to expand its business in the kingdom and shelter from the slowdown in the Emirates. Al Habtoor Leighton, a venture between Dubai's Al Habtoor Engineering and Australia's Leighton International, won its first project in Saudi Arabia last year through a partnership with the Riyadh contractor Al Rajhi Projects and Construction.

The firm is now looking to further capitalise on the construction market in the kingdom, where strong population growth has fuelled demand for new homes, while the government invests heavily in infrastructure projects. Al Habtoor is in final negotiations with two Riyadh contractors and hopes to complete a joint venture agreement by the end of March. "Part of the reason we've struck up negotiations with these parties is because we believe that the association will bring us work, or we'll bring work to them," said Laurie Voyer, the managing director and chief executive of the construction contractor.

"I think we've got to get a mix of traditional building work and infrastructure work; we're not just going to be limited to one particular sector. Our business needs both." Mr Voyer added that the firm might sell shares to the public next year. Khalaf al Habtoor, the chairman of Al Habtoor Group, the building contractor's parent company, has often spoken of floating the unit, although previous plans were scuppered by the financial crisis.

Mr Voyer said the present climate may not be ideal. "It's not for me to determine when the shareholders want an IPO [initial public offering] - but I suppose if we sought any guides at the moment, we're not ready this year. "It will depend on a recovery in both the financial world and where the order book might sit in respect of the business we've got. The two forces might come together in the middle of next year."

The contractor has lost about Dh12 billion (US$3.27bn) from its order book through cancelled contracts in the UAE as a result of the financial downturn. It had secured a Dh2.9bn deal to build the Trump International Hotel and Tower with partner Murray and Roberts on the Palm Jumeirah in Dubai. But Nakheel, the developer of the island, cancelled the project in December 2008. Mr Voyer said the costs for work undertaken on the development had been recovered.

Al Habtoor Leighton's current project backlog stands at Dh23bn, which it hopes to boost to Dh30bn in the next few months with new deals in Abu Dhabi and Qatar. The contractor, along with its partner Murray and Roberts, has been shortlisted to build the Louvre museum on Saadiyat Island in Abu Dhabi and is bidding for the Guggenheim museum, also on Saadiyat Island. "There hasn't been any decision on any of those museums yet; they're all being considered - It's taking a lot longer for things to materialise now," Mr Voyer said. Al Habtoor Leighton is also bidding for the Midfield Terminal at Abu Dhabi International Airport, as well as the New Doha Port project in Qatar.

Dubai's Habtoor Group, which bought into Barclays in 2008, has asked Rothschild to identify five-star hotels for acquisition in Europe, its chairman said yesterday, to take advantage of lower prices after the financial crisis. Khalaf al Habtoor, the billionaire chairman of the group who owns hotels in the UAE, was one of several Middle Eastern investors who bought into Barclays as the lender sought to boost its capital in the crisis. "We talked with Rothschild bank - about investment in Europe, and especially in London and Paris for hotels, if there is anything they can find, so they are looking for us," he said. Mr al Habtoor said the group was looking at companies that wanted to sell their assets due to a lack of liquidity. He had said last August that the group had about US$1.3 billion (Dh4.77bn) to invest in Europe. The company is also considering airport project contracts in several countries, Mr al Habtoor said. The group is a holding company for businesses including construction, hospitality, motor, property and education. Mr al Habtoor is worth $1.1bn, according to last year's Forbes billionaire's list. He owns and operates seven luxury hotels in the UAE and Lebanon, and reported full occupancies for them early this month. Mr al Habtoor said the company was "testing the waters" for two new hospitality projects in Dubai, and he expected to make a decision on those in the fourth quarter of this year or the start of next year. * Reuters