Font Size

- Aa +

Tue 9 Nov 2010 12:21 PM

Font Size

- Aa +

Dubai's Drake & Scull details acquisition strategy

'Acquisitions in 2011, definitely India is a big possibility,' CEO Khaldoun Tabari says

Dubai's Drake & Scull details acquisition strategy
BIG DEAL: Khaldoun Tabari, Drake & Scull CEO (ITP Images)

Dubai contractor Drake & Scull

International is prepared to take on debt to make a

substantial acquisition as it eyes strategic purchases, possibly

in India, its chief executive said on Tuesday.

"We are still very liquid," Drake & Scull CEO Khaldoun

Tabari told reporters on the sidelines of a conference, adding

the company was interested in acquisitions in India and had AED500m ($136m) in cash.

"Acquisitions in 2011, definitely India is a big

possibility."

Asked about the possibility of issuing debt to pay for a big

acquisition, Tabari said: "Very possible (to tap bond market) if

there's an acquisition of substantial value. The market is very

ripe for that."

Shares in Drake were down slightly by 0.4 percent at 0805

GMT.

Drake, which specialises in mechanical, engineering and

plumbing businesses (MEP), has been rapidly expanding its

operations outside Dubai, where house prices have plunged some

60 percent since their peaks in 2008 as a result of the

financial crisis.

Drake & Scull reported a sharp 45 percent drop in quarterly

profit this week, below expectations, triggering a share

sell-off.

Tabari said Drake's order book would expand in the last

three months of 2010.

"The backlog by the end of third quarter is AED4.9bn. We expect the backlog by the end of the year to have

substantially more than what we have today," Tabari said.

On Monday, Tabari had projected an additional AED1bn

worth of new projects to be added to the book.

But Tabari also warned that unless home buyer financing

became more available, housing prices in the UAE could see a

further decline, and that Abu Dhabi and Saudi Arabia will

generate the majority of the new projects.

Tabari said that Drake would likely announce a second

acquisition of a Saudi business within a week, following its

agreement to buy 65 percent of 'Drake & Skull International

Saudi WLL' for AED243m.

($1=AED3.672)

For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.