Arabtec to form joint venture with GS Engineering of South Korea
Arabtec has signed an agreement to set up a joint venture with a South Korean engineering and construction company to build metro lines, railways, ports and tunnels in the Middle East and Africa.
In a statement yesterday, the UAE’s largest listed construction company said it had signed an agreement with GS Engineering and Construction (GSE&C) to pursue heavy infrastructure engineering and construction projects across the region.
The news comes less than two months after Arabtec launched a joint venture with the engineering arm of another South Korean conglomerate, Samsung, to expand into more complex engineering and “big ticket” infrastructure works in the Middle East and North Africa.
The venture announced yesterday, Arabtec-GS Infrastructure, is to be incorporated and headquartered in Abu Dhabi and managed by executives from both Arabtec and GSE&C.
Arabtec-GS Infrastructure hopes to capitalise on the estimated US$600 billion of infrastructure projects that are planned to be built in the GCC over the next six years, of which more than $220bn are for railways.
GSE&C, which was part of the LG conglomerate until 2005, specialises in building heavy infrastructure projects in South East Asia and the Middle East. The company is currently building an 18-kilometre metro line in Doha, and a marine jetty in Ruwais in Abu Dhabi emirate.
It is also working on five metro projects in Singapore and building the first metro in Ho Chi Minh, Vietnam. It has a backlog of US$4.2bn.
Arabtec and GSE&C said the new joint venture would combine their buying power in procurement.
Earlier this year, Arabtec completed a Dh4.7bn rights issue aimed at diversifying the company into more complex oil and gas-related infrastructure projects as well as affordable housing and away from the company’s traditional contracting operations, which were hit hard during the global financial crisis.
“Another key component of the company’s five-year growth strategy is being put in place through this exciting new joint venture with GS,” said Hasan Abdullah Ismaik, the managing director and chief executive of Arabtec Holding.
“This partnership demonstrates further progress being made on diversifying the business into other high margin and high growth segments of engineering and construction. GS has a proven track record in the region, which further complements our expertise in the infrastructure sector and will allow both parties to capitalise on a range of new opportunities in this fast-growing sector,” he added.
“The joint venture brings together two like-minded industry leaders with complementary skills and capabilities,” said Lim Byeong Yong, the president and chief executive of GSE&C.
“The partnership works well with our existing backlog of projects already under way in the region as it will help us grow and expand it.”
Updated: November 4, 2013 04:00 AM