Arabtec Construction, among the Arabian Gulf’s largest builders, has cancelled plans to raise Dh2.4 billion through a rights issue next year.
The builder of the Burj Khalifa said it had scrapped plans for a second tranche of rights issue in view of its strong financial position, according to its filing on the Dubai bourse yesterday.
The company also cited its low debt leverage levels and its firm financial performance.
It said it would look into alternative funding methods when it becomes necessary.
In June, Arabtec raised Dh2.4bn in the first phase of its rights issue, which it said would be mostly used to expand its affordable housing and oil and gas operations, enabling it to diversify from traditional construction activities that were hit hard during Dubai’s property crash.
At the time it said it could raise a further Dh2.4bn in 2014, as well as US$450 million through a bond issue if necessary.
Even though its rights issue this summer was 30 per cent over subscribed, fears of equity dilution hit Arabtec’s share price earlier this year.
The builder yesterday said earnings for the quarter ending in September surged 188 per cent to Dh100.8 million from the same period last year – exceeding most analysts’ expectations.
Revenues for the quarter rose 39.6 per cent to Dh1.94bn, from Dh1.39bn last year, bolstered by Arabtec’s strong operations in the UAE and in Saudi Arabia.
For the first nine months of this year, profits jumped 137 per cent year on year to Dh256m, while revenues climbed 27 per cent to Dh5.1bn.
Hasan Abdullah Ismaik, Arabtec’s managing director, said the results showed that its business was performing well, and that the contracts secured last year were making a notable contribution to cash flow and earnings.
He expressed confidence that Arabtec’s growth strategy would enable the firm to grow its existing businesses and expand into sectors with higher margins and growth.
Saleem Khokhar, the head of equities at National Bank of Abu Dhabi’s asset management group, said the results were good.
“It is important that the board has cancelled the rights issue as there were some investor concerns that their shares would be diluted if the company went ahead with the plan,” Mr Khokhar said.
“The company is moving in the right direction.”
Arabtec shares rose 1.17 per cent yesterday to close at Dh2.59 apiece.