Khadem Al Qubaisi, Aabar's chairman, has been appointed board chairman of the construction giant Arabtec in a move that follows Aabar's recent action to become the largest shareholder.
Aabar chairman takes Arabtec helm
The nomination of Mr Al Qubaisi and other Aabar executives to the Arabtec board represents the consummation of a long-standing relationship between the two companies that began when Aabar tried and failed to take over Arabtec in 2010.
"The involvement of Aabar's senior level for Arabtec is a message that they will be dedicated to the new stake that the company got," said Tariq Qaqish, a fund manager at Al Mal Capital in Dubai. "It's a mixture of commitment and of course a boost from a strategic investor."
Arabtec is the UAE's biggest construction company by market value and last week became a member of the consortium that was selected by Abu Dhabi Airports Company as the preferred bidder for the Dh11.75 billion (US$3.19bn) Midfield Terminal Building project at Abu Dhabi International Airport.
Mohamed Al Husseiny, Aabar's chief executive, was appointed by the board to Arabtec's investment committee, while the directors Mohamed Al Mehairi and Mohamed Al Fahimwere appointed to the nomination and remuneration committee and audit committee, respectively, it was announced yesterday in a posting on the Dubai Financial Market.
Aabar is a subsidiary of International Petroleum Investment Company,which is owned by the Government of Abu Dhabi. It has built up a 10.45 per cent stake in Arabtec this year through purchases by two of its units. Aabar Petroleum Investments has taken 5.32 per cent, while Aabar Real Estate owns 5.13 per cent of the construction giant.
Arabtec and Aabar abandoned a planned $1.74bn takeover by Aabar about two years ago, without explaining why. At the time, the two companies said they would instead pursue a "strategic partnership".
Arabtec yesterday reported a net income of Dh84.1 million for the first quarter, compared with Dh26.6m in the same period last year.
Revenue increased to Dh1.3bn in the first quarter from Dh1.2bn in the previous year.
"What the investors need to focus on is the backlog," said Mr Qaqish. "The company has managed to increase its backlog outside the UAE and that's important."
Arabtec has won increasing amounts of business in Abu Dhabi since it established closer ties to Aabar. Last month Aabar Investments awarded a Dh222m contract to Arabtec to build a 23-storey residential tower. In the same month, an Arabtec unit, Target Engineering Construction, also won a contract for civil construction work on Das Island,the oil export hub.
After a slowdown in projects in Abu Dhabi in recent years, the pipeline for new projects is beginning to fill up again, Arabtec has said.
Arabtec also said it was bidding for contracts in Saudi Arabia valued at billions of dirhams.
In January, the Executive Council gave the green light for a host of projects in Abu Dhabi, including Abu Dhabi International Airport's Midfield Terminal and projects on Saadiyat Island.
Arabtec said yesterday that it was considering acquiring the remaining 45 per cent stake held by three separate partners in its subsidiary, Gulf Steel Industries (GSI).
"The board provisionally authorised the CEO of the company, Riad Kamal, to negotiate the best possible price for acquiring a further 45 per cent in GSI so long as it did not exceed the valuation originally obtained on the said subsidiary," the statement said.
iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.