Arabtec eyes rights issues to raise $1.3bn

Arabtec, the UAE’s biggest construction company, said on Wednesday it may look to raise $1.3bn over the next two years through rights issues.

The Dubai-based firm, which is part-owned by Abu Dhabi Aabar Investments, said it has received approval from regulators for the move which aims to support Arabtec’s growth plan.

Hasan Abdullah Ismaik, managing director and CEO, Arabtec Holding, said: “The capital raisings are essential in helping us to achieve our strategy. It will also provide our shareholders the opportunity to be part of our growth and value creation over the coming years.”

He said the company, which built the Palm islands in Dubai, aims to raise up to $650m in rights issue this year, with a further rights issue of up to $650m in 2014 if needed.

Ismaik added that the company may also issue a non-convertible bonds of up to $450m at the end of the year if required.

“The capital raisings will ensure that funds are available at the right time and enable our shareholders to participate in each stage of our future growth,” he said in a statement.

Arabtec said its pipeline is strong with AED21.5bn ($680) backlog of ongoing and future projects.

On Wednesday, the board of Arabtec approved a detailed growth strategy for the next five years, which is underpinned by organic as well as acquisitive growth.

It forecast that certain sectors will dominate construction expenditure, such as infrastructure, power, oil and gas and affordable housing.

It also identified regional “hotspots” including the Middle East and India. The company said the proceeds of its capital raising would be spread across affordable housing (25%), oil & gas, infrastructure and power (55 %), strengthening existing businesses (15 %) and systems restructuring (5%).

Shareholders will vote on the rights issue next month and then the board will decide on the timing of the issues.

Separately, Arabtec said it has appointed a new chief financial offer to replace Ziad Makhzoumi, weeks after it announced a new chief executive.