FourWinds plans $500m Abu Dhabi aluminium project and educational complex investment

The privately-held FourWinds Group of Companies plans to develop an aluminium project and an educational complex in Abu Dhabi for a total cost of about US$500 million.

The group is keen to expand its operations in Abu Dhabi’s industrial sector, particularly in the Khalifa Industrial Zone Abu Dhabi (Kizad), a free zone that houses the smelter Emirates Aluminium (Emal) and Khalifa Port.

FourWinds, which invests in property, infrastructure, industry and natural resources, is focused on the automotive parts industry in Abu Dhabi.

“We have a strategy in aluminium and we are negotiating an [aluminium] facility in the proximity of Emal to actually manufacture again for the automotive industry certain aluminium components. We are already negotiating offtake agreements with certain buyers in Europe at the moment,” said Vivek Rao, the chief executive of FourWinds Capital Management and acting chief executive of FourWinds project development.

That project, to be located in Kizad, will cost between US$250 million and $300m.

The firm announced last month an agreement to build a 300,000 tonnes per year steel plant to produce automotive parts at a total cost estimated at $600m. The plant will be one of the largest single-source foundries in the world producing car parts, the company said last month.

The steel foundry, FourWinds’ first investment in this country, will be built over three phases, with phase one producing 75,000 tonnes of brake disks and callipers and costing Dh514m. Exports from the foundry will be used by major marques such as BMW, VW and Mercedes-Benz and the makers of car parts, such as Germany’s Continental.

“We have had a long-standing relationship with the automotive industry and as a result of which we found it very profitable and discernible to actually exploit the local energy and low labour cost to actually manufacture some of these components which are actually being manufactured by Oems [original equipment manufactures] in Europe,” said Mr Rao.

“If you make the comparison price difference to the likes of Continental etc, it is pretty significantly different and that’s why they find it attractive to actually look at fostering a manufacturing base in this region. So the automotive sector is still with healthy margins.”

Both projects are being financed 30 per cent equity and 70 per cent by bank loans, Mr Rao said.

FourWinds is also looking at investing in education in Abu Dhabi, in collaboration with institutions from the United States and Europe. Its schools project, which will target the local Emirati population, is expected to cost as much as Dh800m.

The FourWinds investment is one of a series of initiatives in Abu Dhabi to boost the contribution of the non-oil sector to the economy, create downstream industries and jobs.

According to the Abu Dhabi Economic Vision 2030, the non-oil sector is expected to contribute 64 per cent of GDP by 2030.

Non-oil activities contributed 45 per cent to the emirate’s GDP in 2013, versus 43 per cent in 2012, according to the Economic Report of the Emirate of Abu Dhabi 2014.

Investment in steel manufacturing is on the rise in the emirate. The Senaat conglomerate plans to develop a Dh1.1 billion steel plant that will create 370 jobs in Kizad.

Senaat has entered into a joint venture with two Japanese steel makers, JFE Steel and Marubeni-Itochu Steel, to build steel pipes for industrial use.

The new company, Al Gharbia Pipe, will reduce the country’s reliance on steel pipe imports while exporting 40 per cent of its production, Senaat executives said last month.

Elsewhere in the region, FourWinds plans to invest in a billet and rebars manufacturing facility in Saudi Arabia at a cost of about 700m Saudi riyals (Dh685.4m). The plant will provide rollings mills with products and could also export to the region, which has a big construction industry, Mr Rao said. The firm is also eyeing real estate projects in the Saudi capital Riyadh and the Red Sea port city of Jeddah.

But FourWinds’ biggest investment in the region is an $11bn project to build the world’s largest single-site coal-fired power plant at a capacity of 6000 megawatts in Egypt. The project, which was announced at the investment conference Egypt the Future in the Egyptian resort city of Sharm El Sheikh last month, is in partnership with FourWinds’ parent company, Tharwa Investments.

The project, which will be built in phases, is expected to be financed by Tharwa, FourWinds, banks and export credit agencies (Ecas), such as the Korean and Japanese Ecas.

The firm has also announced a $1bn fund dedicated to infrastructure investments in Egypt, which is experiencing a resurgence of investor interest on the back of economic reforms and an improving political environment.

FourWinds, which has offices in Boston, Dubai, Kuala Lumpur and London, is majority owned by Tharwa, which is made up of regional high net-worth individuals.

The FourWinds project development arm invests in projects in the property, infrastructure, industrial and natural resources space. Its FourWinds capital management arm invests in sectors such as commodities, energy, metals, agriculture, timber, waste and water.