Capital markets oasis

30 May 2013 By Una Galani Follow @ugalani

UAE contractor Arabtec is seeking $1.3 bln through share issues to fund expansion. The strategy makes sense, but it lacks detail and the newness of the management is a risk. And it’s unclear if the agenda of its big Abu Dhabi backer, Aabar, is aligned with ordinary investors.

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Dubai-based contractor Arabtec will open subscription for a $650 million rights issue on June 9.
The company will sell 1.57 billion new shares each at a price of 1.5 dirhams, a 26 percent discount to the closing price on May 29. Arabtec has a market capitalisation of around $1.7 billion.
Arabtec is planning to raise up to $1.8 billion to fund its expansion drive, from two rights issues and a $450 million bond.
The company replaced its chief executive in February as part of a wider management shake-up led by its largest shareholder Abu Dhabi state-linked fund Aabar Investments. The firm is yet to appoint a chief financial officer.
Aabar increased its stake in Arabtec during 2012 and now owns 22 percent. The fund and its related entities have four representatives on the nine-member board, including the chairman.
More than half of the proceeds from the capital raising will fund acquisitions and an agreement to form a joint venture with Korea’s Samsung Engineering in the oil and gas sector.

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