Unit of Dubai’s Arabtec wins Dh1 billion Kazakhstan contract

Subsidiary Efeco to carry out mechanical, electrical and plumbing work at the Abu Dhabi Plaza development in the Kazakh capital Astana.

Arabtec's mechanical, electrical and plumbing subsidiary has been awarded a Dh1 billion contract to carry out work at a vast hotel, shopping and housing project in Kazakhstan.

The subsidiary, Emirates Falcon Electromechanical Co (Efeco), will carry out the work at Abu Dhabi Plaza development in Astana, the Kazakh capital.

The contract represents Efeco’s first project outside the Middle East and comes as Arabtec embarks on an ambitious expansion plan.

The Abu Dhabi Plaza project in Astana is owned by the Abu Dhabi Government and its development is being managed by Abu Dhabi-listed Aldar Properties.

The project is to span 500,000 square metres and comprise five towers, the tallest of which is to stand 88 storeys (320 metres) tall – making it one of the highest buildings in Central Asia.

The complex as a whole is to feature 566 flats; 107,000 square metres of office space; a five-star hotel; and 50,000 square metres of shops.

Work on the scheme, which was originally slated to be completed in 2010, is underway after the Aldar subsidiary Aldar EuroAsia awarded a Dh4 billion construction contract to a joint venture between Arabtec and Athens-based Consolidated Contractors Co in June 2013.

The project in Astana – the Kazakh capital since 1997, when it succeeded Almaty – is now expected to wrap up by 2017. That would be in time for the economic Expo that is scheduled to be held in the city, beginning in June 2017.

The news of Efeco's contract win comes as Arabtec, which is 21 per cent owned by the Abu Dhabi Government-owned investment fund Aabar, is attempting to increase its presence in the lucrative specialist mechanical, electrical and plumbing (MEP) construction business.

The contract comes just a week after Efeco won a Dh878 million contract at Abu Dhabi International Airport’s Midfield Terminal as part of a joint venture with Dubai-based BK Gulf and China State.

“This award is a true demonstration to Efeco’s work towards establishing its name as a leader and key player in the MEP sector in the Middle East and North Africa region,” said Hasan Abdullah Ismaik, managing director and chief executive of Arabtec and chairman of Efeco. “We also have a strong aspiration to develop the company into a global leader in the MEP sector.”

Efeco became a wholly owned subsidiary of Arabtec in October 2013, when Arabtec’s construction unit bought management out of its remaining 45 per cent stake. After the buyout, Arabtec said it planned to increase Efeco’s share capital by Dh500 million, to grow the business by investing in equipment and machinery so that it could bid for bigger projects.

Shares in Arabtec rose 3 fils yesterday to Dh4.90 each on the news.

Since the start of 2014, Arabtec shares have increased by a staggering 70.7 per cent as the company has announced a string of new contract wins. These include a contract with Aabar to build 28 towers in Abu Dhabi and nine in Dubai valued at Dh22.4 billion as well as a Dh2.6bn contract to build a 61-storey block of flats on Reem Island in the capital.

Under its growth strategy, Arabtec plans to diversify beyond its traditional activities of construction in Dubai and the UAE.

In June, Arabtec raised Dh2.4 billion in the first phase of a rights issue that the company said would be mostly used for expansion and diversification into affordable housing and oil and gas operations.

Since then the company has announced a string of new initiatives aimed at diversifying the company’s business even further including a joint venture with the South Korean giant Samsung and a new business aimed at developing its own real estate schemes as well as building them.

Arabtec has long been rumoured to be expanding its MEP and interior design expertise. In November 2012 Arabtec acquired a 24 per cent stake in the interior design company Depa.

"It makes sense for Arabtec to expand its business into MEP and interior design," said Tariq Qaqish, head of asset management at Al Mal Capital. "Arabtec has acquired a stake in Depa but we have heard no news that it has acquired any stakes in Drake & Scull and so it looks likely that Arabtec is now trying to expand its MEP business on its own and there is no reason that it cannot succeed."