Arabtec planning to buy rest of MEP arm - report
Company to acquire remaining 45% of Emirates Falcon Electromechanical
Arabtec is set to buy the remaining 45% of its existing MEP arm, Emirates Falcon Electromechanical (EFECO), that it does not already own for $45m, according to Reuters.
The agency said that two people with knowledge of the deal said that it planned to take full control of the business, which was set up in 2001 and has operations in Abu Dhabi, Doha, Amman and Riyadh.
Arabtec declined to comment.
In an interview that appears in this week's Construction Week, Arabtec CEO Hasan Ismaik said that the company is planning to spend 15% of the proceeds of the $1.75bn it is raising - $1.3bn through two rights issues and $450,000 through non-convertible bonds - on boosting its existing businesses, including its MEP and its facilities management arms.
He described the firm's MEP division as a "key business", pointing out that between 25-40% of a typical build cost is spent on MEP. The division also makes gross margins of 13%-18%, which is higher than the overall gross margin of 10% made by the business last year.
"Our MEP business is already very strong and we intend to grow this business by enhancing its capital base so that it can tender for larger contracts," Ismaik said.
Similarly, he added that the company "may look into potential M&A opportunities" in order to boost its facilities management business.
The company set up its facilities management arm, Arabtec Envirogreen, in December 2011, with a view to picking up more work in the sector. It is a partnership between Arabtec, EFECO and Irish firm Envirogreen.