“I think the deal was controversial, no-one expected it,” Khaldoun Tabari, CEO and vice chairman of Drake & Scull International (DSI), grins.
It is two days after his Dubai-based firm signed a deal with Goldman Sachs to sell the US investment bank AED147m ($40m) worth of its warrants and Tabari is keen to tell CEO Middle East exactly what it means for the company he helped turn into one of the region’s largest contracting firms.
“One, it validates Goldman Sachs’ view on the construction industry in general in the Middle East [and] that to me is a tick in the box. They believe in it and we are in the right business,” he explains.
“Two, it further adds and gives us a tick in the box again that Drake & Scull is a company that is growing, is well-managed and we expect it to grow and flourish in the future,” he adds. “It gives us money at a very low rate for us to grow our business [and] it really says ‘go out and grow your business.’”
Like many Dubai-based contracting firms, Drake & Scull was hit hard by the slowdown in the emirate’s once-booming real estate sector, but now, thanks to an impressive and speedy expansion strategy across the region, things are really starting to look up for the company. In the last three years the firm has increased revenues generated from outside the UAE from 22 to 75 percent and Tabari continues to look at growth opportunities as far as India and Asia.
Much of the growth in recent years has come through a combination of organic growth in new markets and acquisitions. In the last five years, it has made six acquisitions including the German wastewater specialist, Passavant Roediger.
The Goldman Sachs deal will enable the firm to continue to grow, says Tabari. Drake & Scull is currently in preliminary talks to make an AED100-150m ($27.2-$40.8m) acquisition in Saudi Arabia and is also looking at purchasing two power plants in India. Other areas of growth could include co-investing in public private partnerships in water development projects in India, Tabari says.
“We are talking about acquisitions; we are talking about development… We are willing to invest,” he explains. “Whether it’s to acquire and add to our top line or whether we co-invest. If a developer, for instance, has the right piece of land that can generate sale and profit in the end we would be more than happy to co-invest with that developer.”
Tabari has been leading Drake & Scull since 1998, when he first bought a stake in the firm. However, his association with the originally British company dates back to 1982 when he first joined the firm to work on a project that involved the installation of eighteen radar stations and underground command centres in Saudi Arabia, which were later used in the first Gulf War.
The firm was wholly owned by a consortium of investors, including Tabari, before it listed 55 percent of the company on the Dubai Financial Market in 2009.
Today, Drake & Scull has around 20,000 staff with operations spanning the Arab world and as far as Thailand, South East Asia and Europe, and in addition to providing mechanical, electrical and plumbing services — for which it is perhaps best known — it also generates a large proportion of its revenues from contracting, water-treatment works and building district-cooling plants.
Perhaps one of Drake & Scull’s most important up-and-coming markets is India, where it launched last year. The firm has since won several contracts including a AED100m deal to set up an intake water system for a thermal power station in Orissa. But it sees increased demand for its services amid the country’s rising appetite for residential, commercial and industrial space and improved infrastructure, says Tabari.
“Asia is the place where we feel there will be tremendous growth,” he explains. “When you say growth it’s all about what we can achieve in Asia and in the Middle East; you are not really looking at growth in Europe right now, you are looking at Asia.”
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