No one, least of all Zeina Tabari, imagined she would ever work for the family business. The 29-year-old originally wanted to open a chocolate shop after finishing her degree in finance, not work in the HR department of Drake & Scull, the contracting firm run by her father, Khaldoun Tabari. But a three-month internship was quickly followed by a full-time job offer and she seized the opportunity.
“My father offered me a position but I got paid peanuts at the time. It was basically ‘come in and do the work',” she laughs. “But I enjoyed it and I thought that I added a lot of value.
“When you work for the family business you need to prove yourself. There are two sides to it; the expectations from your family are way too high — they expect you to be there 24-hours a day — and your colleagues don’t take you seriously because they think you are there because of your family, they don’t think you are qualified. So you have to prove yourself to both sides,” she adds.
In the decade since Tabari joined the Dubai-based firm, she has more than proved herself capable, and today as chief corporate affairs officer, she heads up the company’s investor relations. Some experts in the industry are already touting her as a future boss of the entire company though, ever modest, she says: “I am not on the board of directors as of now… I don’t think I have the right qualifications or I didn’t have at the time we did the IPO, it was my first job officially and I believe that regardless of our ownership it should be based on qualifications and experience.”
Perhaps most importantly she has also learned to love the firm her father helped transform into a multibillion-dollar regional powerhouse.
“We did not float to cash out — we are not here for the money — we are here because we love this company; it’s a legacy for us. Drake & Scull is not the only company that we own but it has a special meaning to my father because he has seen it grow,” she says.
Tabari’s father acquired a majority stake in Drake & Scull International, the UAE-based arm of the UK mechanical, electrical and plumbing (MEP) specialist in 1998. With revenues of less than AED100m ($27.2m) a year, DSI was a far cry from where it finds itself today. Several years later, Tabari acquired the remaining stake and its UK operation changed its name to Emcor Engineering.
“I never used to see my father when I was younger, he was so busy working,” says Tabari. “But the company has grown from a turnover of AED100m ($27.2m) to hopefully this year we’ll close at AED2.5bn ($681m).”
With a market cap of AED1.81bn ($493m), the company certainly looks in healthy shape.
The firm, which now employs 20,000 people in twelve countries, posted a 76 percent increase in third-quarter profits in November, beating analysts’ expectations as it grew its business across the Middle East and North Africa. Tabari is just as confident about the year ahead.
“Based on a secure backlog, which is around AED7bn ($1.9bn) today, we expect that next year we’ll probably be growing around 20-25 percent compared to 2011,” she says.
The Tabaris were as optimistic about the region’s long-term growth prospects in 2006, when they made the decision to IPO and list on the Dubai Financial Market. Wanting to be fully involved in the process, Tabari decided to go back to school to learn the skills required to take care of investor relations.
“I really wanted to be a part of the IPO experience but I didn’t have any experience at the time or the qualifications. So I went to London, did my Masters and an MBA in finance and worked for an investor relations company for six months before coming back and taking on the investor relations function [at Drake & Scull],” she explains.
The IPO was 101-times oversubscribed and raised nearly $324m but shares lost as much as 30 percent of their value on their first day of trading in March 2009 as the global financial crisis hit the region.
“We did expect it, we were hoping it would stay above AED0.60 and it stayed at AED0.74 and hasn’t fallen under since that day. But I would say that the work had only just started,” she says.
“We thought we’d list — at the time the markets were booming — and the share price would be AED2 in two years. Our backlog was increasing but our share price was going in the opposite direction,” she adds.
The UAE, particularly Dubai, was hit hard by the global financial downturn, which saw property prices plummet over 60 percent from their 2008-peak and forced many developers to look outside of their home market for new business.
In just twelve months Drake & Scull decreased its exposure in Dubai from 80 percent to ten percent and shifted much of its focus to Saudi Arabia.
“When the recession happened we, as management, had two responsibilities; one [to look for] business from abroad because we had 12,000 employees in Dubai that we needed to create opportunity for [and two; help our] partners with payment projects,” says Tabari.
“We sat with all of our clients and tried to be as transparent as possible and tried to help them out, whether it was helping them with funding or helping them settle on a project, and we were able to do that while winning more projects,” she adds.
Fortunately for Drake & Scull, the company has no exposure to Dubai’s Nakheel, one of the worst-hit developers in the region. “We’ve never worked with Nakheel. I remember in 2006 and 2007 everyone was working with Nakheel and people used to think we were wrong not to work with them,” says Tabari.
“I don’t think [it was a conscious decision]; it was just the market was booming and there were so many other opportunities and we were busy, so we never perused the right relationships with Nakheel."
Despite the slowdown in new projects in the UAE, the current gloomy economic outlook has enabled the family to buy back some of its shares, increasing its shareholding in the firm to 43 percent. “We did not sell any of our shares, we diluted because we increased capital… however we managed to buy back a lot from this market because we believe in the company. With 43 percent, we are the biggest shareholders of Drake & Skull right now,” says Tabari.
Despite concerns over the effect a second global slowdown could have on the region’s construction industry, Tabari is optimistic that the market is starting to show some signs of a recovery. Overdue payments and access to funding, is improving, she says. “In terms of outstanding receivables, the majority has been cleared and there are no issues. If there were issues it would have been cleared up by 2009, the beginning of 2010.”
Since its IPO, the firm has announced several acquisitions — including a SR128m ($34.12m) deal for the Saudi-based International Centre for Contracting Company — as it looks to grow its business abroad. This year, however, Tabari says the firm will adopt more of an organic approach to its growth.
“At the time of the IPO we said the strategy we will horizontally integrate and vertical integrate. We have done a lot of horizontal integration… however we haven’t really looked at vertical integration,” she explains.
“We’re going to be evaluating a lot of markets and if it is easier to enter into the market organically then we will do so. You will see us entering Algeria organically, Libya will be organic. Egypt is doing well and Algeria hopefully will do very well too,” she adds.
Tabari cites “tremendous” growth opportunities in Libya as well as Saudi Arabia. The group is also eying tenders in India and Qatar. “India is a market we have always liked. With us having a project in Thailand right now and having [already had some] experience in India we decided to go back to India and open two subsidiaries; the MEP subsidiary and the water and power.
“India has a very fragmented MEP market so you find the electric, plumbing contractors but as the growth in India is around eight to nine percent for the next five years, we’ve seen a lot of developers looking at an integrated end-to-end service provider,” she adds.
The construction industry in Qatar, the Gulf state that will host the 2022 World Cup, is also expected to pick up.
“As soon as they did announce the FIFA World Cup in Qatar we saw the markets boom, we saw the prices of real estate increase but on the ground there is nothing happening. There are tenders but not awards and we are probably going to see awards by the end of 2012.”
She doesn’t, however, rule out acquisitions entirely. “There are obviously a lot of distressed sellers at the moment, a lot of opportunities and we do have the cash — we still have AED600m left [cash]... on our balance sheet. If we do look at acquiring companies we will be able to raise the funds from banks, we don’t see that being a problem.
“However, it’s about delivering good quality projects in remote locations so we have to build our people. If we don’t have the right people, if we continue to acquire and growing into new markets, we won’t be able to deliver the right quality of projects,” she adds.
Tabari might have started at Drake & Scull somewhat reluctantly but she relishes the challenge and enjoys her role in growing the business. It’s a skill she also hopes to use in her latest role as an investor in the Dubai-based Grooming Company. “It’s quite exciting, we have a couple of new investors on board, and we’ll be growing hopefully in Abu Dhabi and other markets as well. I don’t work there full time… but it’s something that was a hobby of mine and I wanted to peruse it. As much as I loved Drake & Scull and I love being there I tend to forget I’m a female in a very male-dominated industry so I wanted to do something a little bit more feminine,” she says.
It doesn’t look like it will be too much longer before Tabari announces her plans to open that chocolate shop after all.
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