ASGC, a Dubai-based construction group, acquired a minority stake in the UK contractor, Costain, for £25 million (Dh114m) in an effort to expand its presence in the country.
The company took a 15 per cent stake in Costain as part of the UK contractor’s £100m cash raising share issue, ASGC said in a statement on Sunday. The company has made a binding commitment to purchase more than 41.7 new ordinary shares in Costain’s enlarged share capital.
“We always seeking to diversify our interests and see long-term, structural growth opportunities in UK infrastructure,” Bishoy Azmy, ASGC group chief executive, said. “We see the move as a way to benefit from an expected increase in UK infrastructure spending and believe that Costain will be well placed to take advantage of these.”
The UK, one of the worst-hit European economies by the coronavirus pandemic, is seeing record stimulus initiatives from its government to cushion its economy from the economic effects of Covid-19. It is pouring in tens of billions of pounds on healthcare infrastructure, guaranteeing small business loans and paying part of employees' wages on behalf of some struggling firms.
The country has also pledged to spend £600 billion on infrastructure by mid-2025, as the government ends the era of austerity and boosts employment. The infrastructure spending will target roads, railways, housing, digital connectivity and research and development.
"We are pleased to have secured significant support from investors for this fundraising. With a stronger balance sheet and the positive long term outlook for UK infrastructure, Costain will be better placed to benefit from the significant market opportunity in front of us," Alex Vaughan, chief executive of Costain, said.
Founded in 1989, ASGC has helped build large-scale project such as the Coca-Cola arena in Dubai, the Expo 2020 Sustainability Pavilion, Sheikh Mohammed Bin Rashid Public Library, the expansion of Dubai International Airport. The company has an annual turnover exceeding $1bn and employs 18,000 people.