A fortnight after Arabtec finally confirmed the departure of former CEO Hasan Ismaik, during which time its share price took a hammering, the firm finally spoke about its plans in a press conference in Abu Dhabi last Wednesday. The brief event threw some light on the future direction of the company.
For instance, Arabtec scotched rumours that there was a plan to delist the company, while chairman HE Khadem Al Qubaisi also dismissed talk of a rift between the firm and its major shareholder, Abu Dhabi government-owned Aabar Investments.
Indeed, Al Qubaisi said the pair enjoy a “very strong” relationship, before hinting that ties could soon be strengthened further.
This may help to reassure investors in the short-term, but many of the accompanying statements from him raised more questions than the firm actually answered.
Al Qubaisi said Arabtec would be restructured to allow it to focus on its core business of construction rather than expanding into new areas, such as oil & gas. This seems to be perfectly sensible given that it has a backlog (including its huge deal with Egypt’s Ministryof Defense) of over $50bn. However, this pretty much undermines the five-year strategy launched under Ismaik’s watch last year – on the back of which the firm tapped up shareholders via a $653mn rights issue.
Ismaik also embarked on a radical overhaul of the company’s senior management, replacing scores of top people with his own appointees – most of whom it appears have been replaced following his resignation.
So what will happen with his other initiatives, then? The two deals entered into with Korean EPC firms Samsung Engineering and GS Engineering to target (but which have yet to deliver) oil & gas and infrastructure work, for instance?
Or its plans to move into the affordable housing market, the MEP market and into facilities management?
Also, if Arabtec isn’t planning dedicate as much focus on oil & gas, what will it do with the Target contracting business in which it bought out its former shareholding partners in November 2013?
Then there is the matter of Ismaik himself, whom Qubaisi says resigned for “personal reasons” and that it wouldn’t have any impact on the firm’s plans.
Yet Ismaik remains its biggest shareholder, owning around 10% more of the company than Aabar Investments. Arabtec argues that it will not be affected whether Ismaik decides to sell or not, but that seems a little hard to swallow. If a single investor (be it a company or an individual) were to buy this, they would naturally expect some sort of say or influence over the firm’s strategy in return for what would be a hefty investment.
Followng Ismaik’s resignation, I suggested that what Arabtec now needed was a period of calm to ensure that it can recruit the thousands of people needed to deliver projects. The whirlwind of sackings that have occurred since will hardly have been conducive to this. Its new ‘back to basics’ approach seems sensible, but one can’t help but wonder what (other than contract wins) has been achieved over the past 12 months?
Where next for Arabtec?
Contractor's attempt to explain recent events left more questions
A fortnight after Arabtec finally confirmed the departure of former CEO Hasan Ismaik, during which time its share price took a hammering, the firm finally spoke about its plans in a press conference in Abu Dhabi last Wednesday. The brief event threw some light on the future direction of the company.
For instance, Arabtec scotched rumours that there was a plan to delist the company, while chairman HE Khadem Al Qubaisi also dismissed talk of a rift between the firm and its major shareholder, Abu Dhabi government-owned Aabar Investments.
Indeed, Al Qubaisi said the pair enjoy a “very strong” relationship, before hinting that ties could soon be strengthened further.
This may help to reassure investors in the short-term, but many of the accompanying statements from him raised more questions than the firm actually answered.
Al Qubaisi said Arabtec would be restructured to allow it to focus on its core business of construction rather than expanding into new areas, such as oil & gas. This seems to be perfectly sensible given that it has a backlog (including its huge deal with Egypt’s Ministryof Defense) of over $50bn. However, this pretty much undermines the five-year strategy launched under Ismaik’s watch last year – on the back of which the firm tapped up shareholders via a $653mn rights issue.
Ismaik also embarked on a radical overhaul of the company’s senior management, replacing scores of top people with his own appointees – most of whom it appears have been replaced following his resignation.
So what will happen with his other initiatives, then? The two deals entered into with Korean EPC firms Samsung Engineering and GS Engineering to target (but which have yet to deliver) oil & gas and infrastructure work, for instance?
Or its plans to move into the affordable housing market, the MEP market and into facilities management?
Also, if Arabtec isn’t planning dedicate as much focus on oil & gas, what will it do with the Target contracting business in which it bought out its former shareholding partners in November 2013?
Then there is the matter of Ismaik himself, whom Qubaisi says resigned for “personal reasons” and that it wouldn’t have any impact on the firm’s plans.
Yet Ismaik remains its biggest shareholder, owning around 10% more of the company than Aabar Investments. Arabtec argues that it will not be affected whether Ismaik decides to sell or not, but that seems a little hard to swallow. If a single investor (be it a company or an individual) were to buy this, they would naturally expect some sort of say or influence over the firm’s strategy in return for what would be a hefty investment.
Followng Ismaik’s resignation, I suggested that what Arabtec now needed was a period of calm to ensure that it can recruit the thousands of people needed to deliver projects. The whirlwind of sackings that have occurred since will hardly have been conducive to this. Its new ‘back to basics’ approach seems sensible, but one can’t help but wonder what (other than contract wins) has been achieved over the past 12 months?
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