Arabtec sets up SR150m venture in Saudi Arabia
Arabtec Construction, a subsidiary of Arabtec Holding, yesterday announced the setting up of Arabtec Saudi Arabia, a subsidiary venture with a paid up capital of SR150 million (Dh150m).
The deal signed with CPC Services Company, a member of the Saudi Bin Laden Group, and Prime International Group Services, a subsidiary of a leading Saudi group, will tap "the ongoing growth of the Saudi construction and infrastructure market", said Riad Kamal, CEO of Arabtec Holding.
The venture is 45 per cent Arabtec UAE, 35 per cent CPC and 20 per cent Prime International, he added.
"The projected turnover in the first year will be in excess of SR1.5 billion and in the next two to three years will increase to three to five billion Saudi riyals," he said.
He did not rule out the listing of the company in Saudi in the next three years based on market conditions. "It is too early to comment but we will look at it in two to three years time and it could be something that we would consider then," he said.
Arabtec's current order book stands at Dh39bn.
"This figure includes the Okhta project in St Petersburg in Russia, which has finally been approved by Gazprom. Last week, we concluded negotiations with them and are hoping that the board will give the go ahead," he said. The company was expecting the deal to come to fruition by December 2008.
It is also working on the enabling works of the Cleveland Hospital project in Abu Dhabi and has submitted its "intention to bid" on the Burj Al Fattan project at the Dubai Marina.
"Once we complete the enabling works on Cleveland and the design is done, we will wait to see if the client will offer a bid for the rest of the construction work or negotiate with us," Kamal told Emirates Business.
Speaking on the Meydan issue, Kamal said that Arabtec was not willing to issue any claim numbers on the civil suit and arbitration proceedings initiated along with its partner WCT over the alleged "breach of contract" for cancelling the deal to build the racecourse in Dubai. "The numbers have not been finalised yet but we will issue them when it is appropriate. But WCT has announced in Malaysia that the amount will stand at Dh 1.69bn," he added.
"Both sides have appointed their arbitrators and this process might take a year or longer to resolve the outstanding issues."
As for the Warsan project, Emaar has not officially informed Arabtec on the "cancellation of the project and are thinking about it based on the request of investors".
He added that the company has "not officially started on the project and hence it will not impact us".
Meanwhile, Burj Dubai is on track and "the current programme is to finish it before the end of 2009 and that is on schedule", he said.
Arabtec is currently in the process of "making the necessary arrangements to start immediate mobilisation of the workforce and equipment to the Kingdom in order to participate in a major project" secured by CPC in Riyadh, though it declined to give any further details on the project.
Mu'taz Sawwaf, Chief Executive Officer, CPC, said that it approached Arabtec only a month ago.
"A month ago, we were looking for good partners to assist us with the projects we have on hand and we chose Arabtec. We were looking for trained people who are experienced in the work that we plan to do and we have a huge backlog of work.
Arabtec Saudi Arabia will take part of some projects that we are doing but we have other partners working with us on different. Projects," he said. "In the next three weeks, we are also buying out Indian companies."
He, however, declined to give any further details, including that of the company's order book and said that the 'value of our projects is quite substantial'.
Construction Products Holding Company, (CPC), deals with construction products and is headquartered in Jeddah.
"We are the main suppliers of for all Bin Laden projects" he added. Prime International Group Services CEO Adel Ghazzawi said that it initiated discussions with Arabtec two months ago.
"We initiated discussions two months ago and have been working very closely with Arabtec Holding on moving their business into Saudi along with the Bin Laden Group.
"The total paid up capital of the venture is SR150m," Ghazzawi told Emirates Business in an exclusive interview.
Kamal said the coming months look good for the company.
"Cash and receivables have been coming slowly in the last three months but the situation has changed with the liquidity being pumped into the system and we received almost all our dues that were received until December 2008," he said.
"We have promised that the flow will continue to our receivables in the coming months and if that happens, our liquidity will be positive," said Kamal.
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