Dubai construction firm Arabtec maintains a good relationship with major shareholder Aabar Investments and expects to continue growing strongly, Arabtec’s chief executive said on Monday.
Shares in Arabtec, one of the most heavily traded stocks in Dubai, have plunged 48 per cent from their May peak to close at Dhs4.05 on Monday, dragging down the entire Dubai market.
One factor behind Arabtec’s slide was the decision of Aabar, an Abu Dhabi state fund, to cut its stake in the company to 18.85 per cent from 21.57 per cent between June 8 and 11. The stake is now 18.94 per cent, according to bourse data.
The divestment raised fears among investors that Aabar, which has played a key role in steering billions of dollars of contracts to Arabtec, might be reducing its commitment to the firm. Aabar has declined to comment on its strategy.
In an interview with Al Arabiya television on Monday, Arabtec’s chief executive Hasan Ismaik said recent rumours of a conflict between the managements of Aabar and Arabtec were untrue.
“What is happening to Arabtec’s share price has no basis and does not reflect the fair value of the stock,” Ismaik said, speaking after the stock plunged its 10 per cent daily limit on Monday.
As Aabar has cut its stake, Ismaik has raised his own holdings in the company. In late May, Arabtec said Ismaik had raised his stake to 21.46 per cent from 8.03 per cent; on Sunday, bourse data showed his stake had risen further to 28.85 per cent.
Ismaik said on Monday that the recent changes in Arabtec’s ownership structure had nothing to do with its huge project pipeline, which he put at Dhs215 billion ($58.6 billion) around the region. This apparently includes a $40 billion deal announced earlier this year to build one million homes in Egypt.
The chief executive added he had no intention of increasing his stake in Arabtec any further and repeated there was no intention to delist Arabtec from the Dubai Financial Market.
In early June, Forbes magazine said Ismaik, 37, had become the first Jordanian billionaire – and the third-youngest billionaire in the Middle East – because of his Arabtec stake, estimating his net worth at $1.4 billion. Forbes said it was not clear where Ismaik raised the money to boost his Arabtec stake.
Arabtec announced on Sunday that its board would meet on June 18 to discuss the company’s projects, among other issues.
Four of Arabtec’s nine board members are associated with Aabar and Aabar’s parent firm International Petroleum Investment Co, including Arabtec chairman Khadem Abdulla al-Qubaisi. The board meeting will take place at IPIC headquarters in Abu Dhabi.