Arabtec is planning to float half of its Egyptian subsidiary on the Cairo stock market in what would be one of the country’s biggest ever initial public offerings.
Dubai’s largest listed contractor expects to raise about US$5 billion by floating 50 per cent of its Egyptian unit, Arabtec Egypt for Property Development, on the EGX exchange in 2016 or 2017, a company spokesman told The National.
Analysts say that is an ambitious target, given that Egypt’s total market capitalisation was $66bn at the end of May.
Further, based on yesterday’s closing price, Arabtec’s market capitalisation is Dh28.9bn.
Arabtec also revealed that it planned to invest $60bn in Egypt over the coming three years in real estate, infrastructure, trains, airports and gas and that it was talking to 14 international businesses which had shown interest in partnering with Arabtec on Egyptian projects.
“Arabtec is floating its Egyptian arm to give Egyptians the opportunity to be part of the success and revenues that come from a company which achieves its goals and dreams, driven by strong UAE support to the new Egyptian president and Egyptian people,” an Arabtec spokesman said.
“We see high potential for investment in Egypt and we feel confident about investing there. This confidence is derived from our conversations with the UAE and Egyptian leadership. The political stability which will be witnessed in Egypt following the victory of Abdel Fattah El Sisi in the presidential election will boost the company’s investment plans in Egypt,” he added.
The timing of Arabtec’s expansion in Egypt coincides with the UAE’s economic support for Egypt. Arabtec Gulf countries have given Egypt billions of dollars in aid since the republic’s generals deposed the Islamist president Mohammed Morsi last year. The former military chief Mr El Sisi was elected president last month.
“The environment for IPOs has improved in Egypt over the past year,” said Simon Kitchen, director at EFG Hermes, which recently acted as bookrunner on the $110 million IPO of Arabian Cement, Egypt’s first offering since 2011.
“It is certainly possible that other UAE companies would list their Egyptian operations in Egypt. Candidates include Emaar and Etisalat,” he added.
In March, Arabtec set up a joint venture with the Egyptian government to build 1 million units of low-cost housing in 13 locations across the country in a Dh146bn project – the largest of its kind in the Middle East.
On Sunday, Arabtec invited UAE-based companies interested in working on the project to register to compete with Egyptian companies for contracts. Arabtec said that it would give priority to Egyptian and UAE contracting, engineering and construction companies to keep costs low.
Arabtec said that it would offer work to more than 200 Egyptian contractors. Hasan Ismaik, the Arabtec chief executive, added that the company was committed to “employing the maximum number possible of Egyptian workforce” at the request of Mr El Sisi.
The housing project is in the design phase. Construction work on phase one, in Obour City near Cairo, is due to begin during the third quarter of this year.
Last week, Arabtec announced that it was also interested in building an airport at 6th of October City, a new suburb of Cairo.
Meanwhile, Mr Ismaik has reduced his stake in the company by nearly one percentage point after nearly tripling it to more than 21 per cent.
According to information posted on the Dubai Financial Market website yesterday, Mr Ismaik reduced his personal stake in the company by 0.95 per cent to 20.51 per cent.
Abu Dhabi’s government-owned fund Aabar has a 21.57 per cent stake in Arabtec.
Yesterday, Arabtec shares rose 0.92 per cent to close at Dh6.58 each. They are up 220.9 per cent for the year to date, after rising by more than half in 2013.
lbarnard@thenational.ae
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