Expansion and acquisitions have put Khaldoun Tabari at the top
In 2008, Khaldoun Tabari and the board of Drake and Scull put 55% of their company up for sale.
The initial public offering (IPO) was well received and oversubscribed by a public enjoying the fruits of the boom years. When it eventually listed in March of 2009, DSI PJSC became the first multi-service commodity company on the Dubai Financial Market.
For Tabari, it was a case of letting go of something the DSI team had been building since they first bought into the existing entity in 1998. Back then things started with the purchase of 50% of DSI in the UK. By 2002, that portion had quickly reached 100%.
“The growth in the business model was in the back of my mind: creating a well integrated MEP contracting company in the Middle East with one theme, one vision and one strategy,” said Tabari. “We had had this idea since early 1998. The IPO model started in 2004, when we felt what we had created had become bigger than us.
“Any business becomes entangled with the personal touch of the creators, but I thought it would be a shame for the creation of this entity – which now spans the whole of the Middle East – to go to waste if I’m not here.”
There’s no doubt that leadership counts and Tabari is conscious of making DSI more than an extension of his own will. Succession planning is in play, with a couple of prospective candidates for the CEO role already in the DSI fold.
“Hopefully one of them will take over from me,” said Tabari. “I don’t plan to spend the rest of my life here. Maybe by December 2012 I will see one of them in my place. I’m trying to firm it up in my mind.”
At the same time, Tabari rules out leaving the company completely. He sees his future role as one of vice-chairman, still working on strategy, but away from the day to day grind.
“Younger people are more aggressive in their thinking and more aware of new trends and markets,” he said. “You cannot have an old elephant running a young organisation, you can take it so far, but the rest has to come from fresh blood.”
The young blood will still benefit from old advice. When asked for the lessons he’d pass on to his successor Tabari’s answers are straight forward and sensible: manage your cash flow, don’t over spend, be prudent and always look at your risk.
With the lessons come a personal recipe for success, traits that Tabari feels all leaders, whether contractors, industrialists or politicians, need to demonstrate.
“Whether you are managing any company in the world, leaders all have traits,” he said. “You have to be a good chaser, always chase. You pass on instructions, follow through and make sure they are done. You rule by example and you
always do the right thing. You also have to have integrity and honesty to lead. In the end it’s the combination of these traits that takes you ahead.”
Tabari sees good decision making as key too, but it’s a process which has had to change since DSI went public. “Entrepreneurs are usually spur of the moment and they take decisions very quickly,” he said.
“In moving to a public company you have the ability to make decisions and get opinions from the board of directors. They are not just there waiting for you to make decisions, it is a process where you need to consult with them, get their opinions and then make them count.
“Because they represent the shareholder it’s not your company anymore, and whatever step you take, you have to be transparent. You achieve that through the board and you cannot do things without that. That is the real difference.
“The biggest decision is always in your ability to check if what you are doing is right. You make decisions every day. All these decisions are tremendous, it’s like getting married every week.”
The company has not been short of decisions to make since its IPO. Having raised AED 1.2 billion it has gone about the business of spending the money. Acquisitions have been the order of the day, as the funds fuelled growth in both expertise and market reach.
This came on top of expansion from its original MEP base into both civil contracting and infrastructure work. Each of the three divisions has a long job list and is engaged in work around the GCC, whether on ITCC in Saudi Arabia, Al Muneera in Abu Dhabi or district cooling plants in Sudan. The acquisition trail is not always straight forward.
While companies can be bought, the integration of its systems and management takes a while to gel. This, says Tabari, generates a lag period between the date of purchase and the effective operation of the new arm, something between six and 12 months.
Acquisitions have also shifted the geography of the company’s backlog of work, spreading it around Abu Dhabi, an emirate which Tabari says has picked up ‘tremendously’, as well as Qatar, Kuwait and Saudi Arabia. The company is also active elsewhere int he GCC, in Asia, Europe and North Africa.
Like most companies engaged in the region’s construction sector, it has had to learn to cope with the ongoing issue of payment. However, it also benefited from the timing of its share issue, which provided a cash buffer, when the market contracted so suddenly.
“If you go back to our IPO, the timeliness of the IPO was tremendous, we had all the cash when everybody had no cash,” said Tabari. “We had AED 1.2 billion when people didn’t have 100 million.
“Now, cashflow is improving. At first it was a shock, that’s human nature. You contract when you have a shock. Contractors did have a problem and we are not different from anybody else. It took us a little bit of time to understand how it works. Things have improved and will keep improving, but it’s going to take some time.
“Three or four years ago, you signed a contract and were happy. You never wondered if they had the money. Now you think ‘am I going to collect?’. “We now go through a set of rules we set internally, to be sure we will be paid and the job will be finished.”
According to Tabari, being finished just can’t be beaten. He makes it sound like the culmination of months of worry and risk: describing contracting as a low-capital, high-risk business and any contractor that does not worry as unable to set up a good business.
“The best moment is always when we complete a job successfully. When you have signed a contract, from the date you sign, you wake up and wonder ‘what have I done?’ And the minute you have handed the job over, that is the best day. That liability is over, you have given it to the client and you are done.”
Looking to the future, Tabari wants to continue to progress in creating a fully integrated MEP contractor, and of course, generating higher revenue and profits.
“I would say that we are in the right industry in the Middle East, offering the right services. In such a short span we have gone from AED 100 million company in 2000 to an AED 2.2 billion company in 2009. That speaks for itself. The company is tremendous.”
Tabari: building a business
Khaldoun Tabari is the vice chairman and CEO of Drake & Scull international (DSI) PJSC and has led the development of the company from a local MEP contractor to a regional leader in the construction industry.
He graduated in the US in 1972, and first worked in the UAE, in a family business from 1972 – 1980. The early ‘80s brought a brief stint in the UK, and then from 1983 to 1997, a longer one in Saudi Arabia. He has been working with DSI in Dubai since 1998.
Under Tabari’s leadership DSI has expanded the MEP business to include engineering, procurement and construction (EPC), civil contracting in addition to the development of design and build engineering expertise in infrastructure, water and power. During Tabari’s tenure, DSI’s revenues and profits have increased more than five fold.
Tabari describes himself as the kind of person who takes at least an hour to unwind and a worrier by nature.
“That's been with me since I graduated,” he said. “That's not a good trait, I do not leave work, it's always with me. I'm always rehashing ideas. I look like a very quick decision maker, but when you ask me a question I have probably thought about it 100 times.”
While Tabari has been involved in a host of significant projects, there is one he missed out on that he wished he’d been a part of.
“Fifteen years ago I wanted to be doing Kingdom Tower,” he said. “We lost that opportunity, but now everyone is building high rises, so it doesn't make a difference.”
In addition to the above, Tabari also serves as a board member for EMCOR Facilities Services Group (ME), Walltech; Cedar Mills, Jordan Fleet Leasing Company; First Qatar Real Estate in Qatar and Energy Central in Bahrain.
Al Muneera is a busy site. People and equipment are everywhere, and it is all on the move, these people have a deadline to meet.
Heading toward a handover in the first half of next year, the project has been dubbed the ‘great Arabian water city of the twenty-first century’.
Al Futtaim Carillion is the main contractor for Al Muneera, which is part of Khor Al Raha, one of 11 precincts within the larger Al Raha Beach development. The mixed-use development is expected to house up to 120,000 residents and is right next to 5.2 million m2 of natural beach, just off the main highway leading in to Abu Dhabi.
The Abu Dhabi arm of Drake & Scull (DSI) is contracted for the MEP works and the company’s area general manager, Ahmad Al Naser, is acutely aware of the project’s importance. “It is a high-profile Aldar development that will constitute a new gateway to the Emirate and form a new regional hub,” he said.
The project is made up of two areas, island and mainland, divided by a canal. The two sections have an approximate 50/50 split with respect to built area/cost, though the island is marginally larger in size. The site area is 146,000 m2, with a total built-up area of 594,000 m2.
This is divided into 254,500 m2 of residential space, plus a 106 000 m2 of basement car parking. The podium level will be entirely pedestrian.
The bulk of the residential space is comprised of 1286 apartments spread over as many as 16 residential towers. Right down on the beach are 11 sea-facing villas, each with five bedrooms.
The development also includes 148 canal-facing, four-bedroom townhouses, and an office tower. DSI Abu Dhabi’s contract is valued at AED 420 million, and includes the full scope of MEP services, including firefighting and access control.