Market pressure may make abroad appeal

UAE contractors could be forced to target overseas investment due to pressure from the financial markets.
Market pressure may make abroad appeal
By Angela Giuffrida
Sat 23 Feb 2008 04:00 AM

UAE contractors could be forced to target overseas investment due to pressure from the financial markets.

Arabtec Construction is one contractor with investments in foreign markets, but according to its chairman, Riad Kamal, this is only because it's a publicly-
listed company.

"The financial markets expect us to spread our risk," he said. "If we weren't quoted, then we wouldn't go overseas. The other difficulty lies in how much of an advantage going abroad will actually be; we can get as much work as we want as long as we have the returns.

Arabtec set up a joint venture with AMN Mauritius in March last year for the execution of contracts in Pakistan.

The company later secured a US $136 million (AED500 million) deal for the construction of Karachi Financial Towers.

Around the time of the deal, Arabtec said it planned to generate 40% of its revenue from operations outside the UAE within three years. The company is also eyeing opportunities in India and Syria.

But Kamal added that while the company is pursuing overseas partnerships, the challenge lies in sourcing qualified companies.

"We're in discussions about forming partnerships with companies here and overseas. But you can't partner in all countries. For example, if you go to Libya you won't find a partner in the local market.

Moving overseas also requires full backing from senior management, added Kamal.

"There needs to be a willingness among senior management in the company to go abroad.

Al Habtoor Leighton, which was formed of a joint venture between the UAE's Al Habtoor Engineering and Australia's Leighton Holdings in September last year, also plans to pursue opportunities in Kuwait, Morocco, Libya and Saudi Arabia.

But David Savage, managing director of Al Habtoor Leighton, said the company will only enter overseas markets when the opportunities arise rather than out of necessity.

"We have no intention of expanding for the sake of it," he said. "There are more than enough opportunities for us here at present. However, we are currently investigating opportunities in the Middle East region and in north Africa. Our strategy for expansion is to follow the clients that we have formed relationships with here into new markets.

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