Demand for Drake & Scull shares

Shares in MEP contractor Drake & Scull International's Initial Public Offering (IPO) were 101 times over-subscribed at its close on 17 July. Successful subscribers are due to be notified of the total number of offer shares allocated to them from 31 July.

Shares in MEP contractor Drake & Scull International's Initial Public Offering (IPO) were 101 times over-subscribed at its close on 17 July. Successful subscribers are due to be notified of the total number of offer shares allocated to them from 31 July.

Around 45,600 subscribers applied for the shares, investing funds of around US $33.8 billion (AED124 billion). The shares were priced at $0.27 (AED1) and offered with a minimum subscription of 20,000. The start of the allotment and refund process is also scheduled for 31 July 2008. Each subscriber will receive a personalised Allocation Notice by post, with an invitation to attend the Constitutive General Assembly (CGA).

Following the convening of the CGA, Drake & Scull will apply for its shares to be listed on the Dubai Financial Market. The firm is expected to start trading its shares by the end of 2008 and be the first MEP contractor to list in the UAE.

Drake & Scull International CEO and vice chair Khaldoun Rashid Tabari said that the funds raised from the IPO will be used for expansion in the Middle East and North Africa. "We have a clearly defined strategy to grow horizontally and vertically and are currently evaluating a number of companies as potential acquisitions that will extend our geographical presence in the region in the leading construction markets, as well as ones that will help us secure access to raw materials."

The firms under assessment as potential targets have not been named. Tabari reported that some are located in new markets into which the firm wants to expand, plus supply firms that will enable it to secure access to raw materials.

"The IPO allows us to capitalise on future growth opportunities and implement our business strategy...This will in turn enable us to increase revenue and profitability," Tabari stressed.

"Drake & Scull has won MEP contracts for two Aldar Properties hotel projects on Yas Island, Abu Dhabi. The deals for the Yas Island Rotana Resort and Centro by Rotana are worth a total of US $34 million (AED125 million).

Under the contracts the firm will supply, install, test and commission the complete fresh and extract ventilation, air conditioning, power distribution, drainage, plumbing and firefighting systems for the projects. It will also supply and install the internal chilled water supply return system, domestic water systems, smoke extract, cctv and security access controls. Both projects are scheduled for completion by June 2009.

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