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Leighton takes 45 per cent stake in Al Habtoor
Leighton, which entered the UAE last year, has contracts worth $1 billion in the country, a company spokesperson told Gulf News.
- By Saifur Rahman, Business News Editor
- Published: 12:14 September 3, 2007
- Leighton's current contracts in the UAE includes the City of Arabia theme park in Dubai.
- Image Credit: City of Arabia
Dubai: Leighton International, the international arm of Australia's largest construction group Leighton Holdings Limited, has acquired a 45 per cent stake in Dubai-based Al Habtoor Engineering, one of the UAE's largest contracting companies, for Dh2.6 billion ($707 million), the company said in a statement.
Leighton, which entered the UAE last year, has contracts worth $1 billion in the country, a company spokesperson told Gulf News.
These include a $550 million highway contract in Abu Dhabi. The project, for Abu Dhabi's Tourism Development and Investment Company (TDIC) involves the construction of a 6.5 kilometre highway, comprising five lanes in each direction. The highway will link Abu Dhabi city with Saadiyat Island, the 27 square kilometre natural island lying just 500 metres offshore the UAE capital.
Besides, the company bagged a Dh234.88 million ($64 million) roads and infrastructure projects at the City of Arabia theme park currently being built by Ilyas and Mustafa Galadari Group. The scope of works include building 5 kilometres of roads, five bridges and large scale underground sewers, water drains and telecommunication facilities.
Leighton has also secured a Dh1.49 billion ($407 million) contract for the construction of a equestrian center for the Qatar Foundation for Education, Science & Community Development.
Shares in Leighton rose by as much as 11 per cent to hit a record high of $48.50 following the news, media reports said.
"The combined orderbook of Al Habtoor-Leighton is about A$4.5 billion, or just under $4billion," Chris Gordon, Leighton International's general manager, Corporate Affairs and Strategy, told Gulf News on Monday.
"We have complementary skills. Our expertise and Al Habtoor's local strength will help us to participate in major projects in the coming years. Now we will be able to bid for major international projects."
Leighton International will have equal Board representation on Al Habtoor-Leighton and managing director of Leighton International, David Savage, will assume a direct role in the day-to-day management of the new business, alongside Al Habtoor's current chairman and managing partner, Riad T. Al Sadik. Leighton has the option to acquire further shares in the future.
“We were looking for a strong partner to help us continue our growth in our core markets and into surrounding geographic markets. Leighton has the size, technical capability and financial strength to be that partner and this will help both of us to achieve more than we could have done on our own,'' Al Sadik said in a statement.
Al Habtoor-Leighton is expected to produce revenues of around $2.75 billion for 2007-08 (incremental 10 month impact for Leighton of $800 million) and revenues are forecast to be in excess of $3.2 billion in 2008-09.
“Our investment of $870 million is funded through a mix of cash - $350 million (40 per cent) and non-recourse debt - $520 million (60 per cent) with the debt funding provided by Abu Dhabi Commercial Bank, EFIC, HSBC, Mashreqbank and Royal Bank of Scotland. The financial structure enhances both the shareholder returns and risk mitigation," Leighton's Chief Financial Officer Scott Charlton said in a statement.
“For 2007-08, we expect Al Habtoor-Leighton to provide a positive contribution which will be EPS accretive to the Leighton Group. We believe there is significant upside over the medium term and we are excited about further prospects in the Gulf," he said.
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