x Abu Dhabi, UAE Friday 21 July 2017

Drake & Scull buys up Saudi Arabian contractor

International Centre for Contracting Company (IC) will be consolidated under the umbrella of Drake & Scull Construction, DSI's wholly owned civil contracting company in Saudi Arabia.

Drake & Scull International (DSI) has spent 128 million riyals (Dh125.3m) to buy a contractor in Saudi Arabia, its second acquisition in the kingdom in a year.

Under the terms of the deal, International Centre for Contracting Company (IC) will be consolidated under the umbrella of Drake & Scull Construction, DSI's wholly owned civil contracting company in Saudi Arabia.

IC, which is based in Riyadh, had a backlog of projects worth Dh800m (US$217.8m) at the end of last year, DSI reported.

The acquisition gives DSI "access to a strong labour force and a more direct route to market than some competitors have enjoyed", Nomura Securities said in a report yesterday.

DSI is one of the region's largest design, engineering and civil contractors. Its current project portfolio stands at Dh8.3 billion, said Khaldoun Tabari, the chief executive.

"With the completion of this latest acquisition, DSI has reached the milestones it set to achieve since its listing in 2009," Mr Tabari said.

DSI has been working to expand its regional reach in recent months. In the first quarter of this year the company won contracts worth a total of Dh2.62bn in Oman, Egypt and Saudi Arabia.

DSI also lists projects in Bahrain, Sudan and Thailand.

Last year the company acquired Drake & Scull International Saudi Arabia, a DSI subsidiary, growing its direct presence in the kingdom. The purchase of IC "marks the end of 'sister company' acquisitions, which the market has always appeared suspicious of", Nomura said in its report.

Saudi Arabia now accounts for 50 per cent of the company's revenue, Mr Tabari told Bloomberg News. Nomura estimates the company's Saudi projects are worth about Dh3.8bn.

In February, the company announced a Dh2bn to deal to help build the King Abdullah Petroleum Studies and Research Center project in Riyadh.

The company is looking to expand into India, Mr Tabari told Bloomberg News.

"With growth rates of 8 per cent, nobody can afford to be out of India," he said.

DSI launched an initial public offering in 2008, when it raised about $322m, and went public in March 2009.

It has been growing through acquisitions, including the purchase last year of a subsidiary in Qatar. DSI closed at Dh1.08 a share yesterday, 5 per cent off its recent high of Dh1.14 achieved in February.

kbrass@thenational.ae