Leighton eyes new Al Habtoor stake

Australian construction group Leighton Holdings could increase its stake in the local Al Habtoor Engineering to 51%.

CHARLTON: Leighton Holdings has an option to take outright control of Al Habtoor.
CHARLTON: Leighton Holdings has an option to take outright control of Al Habtoor.

Australian construction group Leighton Holdings could increase its stake in the local Al Habtoor Engineering to 51% over time, according to a statement made by the company's chief financial officer, Scott Charlton.

The move could also lead to an eventual listing of Al Habtoor-Leighton, which was formed last September.

At the time, Leighton Holdings paid an estimated US $870 million (AED 3.1 billion) for a 45% stake in Al Habtoor.

"Right now we're focussed on bedding down the investment and setting the company up for growth," said Charlton. "We have an option under the acquisition agreement to acquire another six per cent over time, which would take us to 51% ownership."

Charlton added that the longer-term prospect for the company could mean a flotation.

"We may look to list Al Habtoor-Leighton in the Middle East if we feel it's appropriate. We want to keep it as a Middle East-based construction company with local shareholders as we think it's important for the culture and for the success of the company."

Earlier this month, Construction Week reported that Al Habtoor-Leighton aimed to generate $3.2 billion in revenue in its first year.

The company is bidding for projects in the real estate, road and rail infrastructure, oil and gas and marine engineering sectors.

"Al Habtoor is performing better than our acquisition model," added Charlton.

"At the time of the acquisition, we said it would be accretive in the first year. Obviously, in the first year we have issues such as integration costs and amortisation of intangibles, so we're not going to see a large contribution.

"But, Al Habtoor is contributing and we see the outlook as positive through 2009 and particularly from 2010."

Charlton added that one of the reasons the company acquired a stake in Al Habtoor was to make the most of its resources.

"This includes its workforce of 30,000 in the Gulf region. We have put some of our resources into the Gulf, but we're also recruiting both locally in the GCC and overseas. The acquisition hasn't had a significant impact on our resources in other parts of Asia, but we're getting a good return for the resources deployed there."

Until the acquisition of its stake in Al Habtoor Engineering, Leighton's projects in the region included the construction of a $518 million equestrian centre in Qatar; a $63 million contract won in joint venture with Kier International for roads and infrastructure works at the City of Arabia project in Dubailand and a $550 million highway contract in Abu Dhabi.

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