Having an open approach is the lesson of Arabtec

Don;t leave investors in the dark is the moral of the Arabtec story in 2014.

Arabtec was going to be something new - an Emirati conglomerate. Its interests would span the globe, providing construction and engineering expertise hand in hand with some of the world's biggest and most profitable companies.
Its shareholders would reap all the rewards from plans laid out last year by the then-chief executive Hasan Ismaik, and backed by major shareholder Aabar Investments, which evoked pre-crisis ambitions -the blue print would transform the builder of the Burj Khalifa from a big player in a small market to a global leader.
Last year began with a bang. Besides working on highly technical projects around the region, Arabtec was going to be a developer, committing to build a slew of towers in the UAE and a staggering $40 billion deal for 1 million homes in Egypt.
Investors seemed to love it. The Arabtec share price began the year under Dh2.5 and peaked in mid-May at above Dh7.
Mr Ismaik backed the vision personally, hiring new executives and buying up more and more of the company himself.
Somewhere around that May 14 share price high, the story took a different turn. Arabtec quickly became a cautionary tale. A month later Mr Ismaik had resigned. His new executive team was let go shortly afterwards. Investors followed them and the shares dropped to under Dh3 by the end of June. The slide disturbed the general market, triggering margin calls and losses across the board.
A year earlier the company had been rewarded by the market for a decision to scrap a second Dh2.4bn rights issue. Management's sensitivity to investor concerns over dilution of their holdings sparked a recovery in Arabtec's shares.
Fast forward to mid-2014 and management seemed determined not to answer why Mr Ismaik had left, and what the company's strategy was. The lack of transparency cost the company dear in terms of reputation and market cap. The rumour mill was in overdrive and every new trading session brought more pain for its shareholders and stock price. Only after Khadem Al Qubaisi, chairman of Arabtec and Aabar, spoke to media at a tense press conference at the beginning of July did the company's outlook improve.
Mr Al Qubaisi's willingness to address key issues surrounding the company did much to calm investor nerves, and within two weeks Arabtec's stock was close to Dh5. Shares didn't retrace their lows again, proving that transparency has its rewards. In a year when the UAE formally joined the ranks of emerging markets, a status bringing with it the extra scrutiny and high expectations from international investors, Arabtec's experience could not have been more illustrative of how important it has become to communicate effectively and openly with stakeholders.
The lesson is clear. Have big plans, change those plans by all means, but do communicate in a timely and effective manner. Don't leave investors in the dark. Use the media.
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