Equity contribution reaches Dh450m with 12th subsidiary
Emaar Industries and Investments (EII), a member of Emaar Properties, is a private joint stock company established in August 2005. Its main objective is to capitalise on the growth prospects of the Middle East and North Africa (MENA) and South Asian manufacturing sector as a strategic investor and partner. As such, EII invests in existing businesses and establishes joint ventures with leading establishments.
More recently, EII notched its 12th subsidiary as it acquired a majority stake in Caparol LLC, the Dubai arm of leading German decorative paint manufacturer Deutsche Amphibolin Werke (DAW) Group, the largest private paint manufacturer in Europe.
Dr Ahmad Khayyat, CEO, Emaar Industries and Investments told The Business Weekly that this latest acquisition of Caparol has upped its total equity contribution to its subsidiaries to approximately Dh450 million. However, in terms of total equity and value of these businesses, Dr Khayyat said that they are in excess of almost Dh2 billion.
"Our equity contribution to the various subsidiaries and investments we've made are in the range of Dh450 million combined. Of course this is in line with our plans and strategies that we've set almost over a year ago," Dr Khayyat said.
"But if we talk about the total equity and value of these businesses, they are in excess of almost Dh2 billion altogether, and are generating revenue of almost in the range of Dh1.6 to 1.7 billion in total sales," he added.
Discussing about the significance of the new acquisition to EII and its shareholders, Dr Khayyat indicated that the latest acquisition into Caparol is reflective of the diversification of its portfolio.
"It is a long-term business and has continuous growth and value-added process," Dr Khayyat said.
"In terms of Emaar businesses and development, and our relationship on what we contribute, definitely as subsidiaries of Emaar Industries and Investments, they support Emaar and they support all developments in the market by always being able to bring solutions, technical solutions, engineering solutions, new products and variations to whatever are available in the market," Dr Khayyat added referring to its significance to Emaar as a developer and the property development sector in general.
Dr Khayyat however clarified that subsidiary companies of EII does not necessarily give them an advantage in terms of bagging contracts with Emaar as he explained that, "We are not sole suppliers of Emaar. At the same time it is not good for us and Emaar to depend on a single source."
"It is our job to compete in the market, it is our duty to compete in the market and provide the best solution, the most effective and economical solution to Emaar and other developers. Otherwise there is no point of running the business if we take it for granted that we are going to take Emaar jobs," Dr Khayyat further explained.
In terms of the further acquisitions and adding more to its growing list of subsidiaries, Dr Khayyat indicated that EII is looking at higher added value investments while balancing its portfolio.
"I would say that we have in the pipeline tens of opportunities that we are looking at, but of course, we are focusing more on higher added value investments that will support our portfolio. This way we will diversify also the risk in the various sectors, and so now we are in the process of balancing the portfolio by investing into other sectors," Dr Khayyat said.
"Building and construction material is only one area that we look at. We are also looking at engineering products, pharmaceuticals, and the oil and gas business. So in 2008, I think we will see some diversification in terms of investment plans," Dr Khayyat added.
At the moment, EII is dedicated to investing in sustainable companies and projects that are economically beneficial and commercially sound. It is focused on maximising its subsidiaries' long-term value, exposing them to industrial best practices, improving corporate governance, providing a solid and flexible capital base and ensuring sustainable cash flow.
As such, EII focuses on exploiting the potential of the fast-growing sectors in the region, including building materials, chemicals and petrochemical products, FMCG, healthcare, metals, engineering industries including equipment and machinery, electronics and electrical equipment.
Apart from Caparol, other subsidiaries in EII's portfolio include: Multiforms, a leading manufacturer and supplier of custom aluminum curtain walling and cladding, and a range of advanced architectural materials; Mammut Building Systems (MBS), one of the region's largest manufacturers of pre-engineered steel buildings (PEBs) and polyurethane injected sandwich panels; Starwood Industries, a primary manufacturer of quality internal and external doors, wooden and aluminium kitchen cabinets and wardrobes; Haseeb Rasoul, a prime player in the field of furnishing and interiors, specialised in the production and supply of woodwork in addition to turn-key interior works and decorations; Advanced Composites, a design and manufacturing company supplying quality and high performance corrosion resistant fiberglass products to municipal, industrial, marine and oil and gas industries; Specialized Metal Systems, a key producer of school furniture and a specialist in the field of metal works and stainless steel fabrication; Emirates Jewellery Manufacturing Company, a joint-venture company between EII and Damas producing a full range of fashion jewellery, from individual diamond and gold collections to more generic pieces; Emiratex, a UAE-based industrial-scale laundry and dry-cleaning service provider that principally serves the booming hospitality sector of the UAE; Dynergy Technologies, a UAE-based company specialised in the assembly and supply of Medium Voltage (MV) and Low Voltage (LV) electrical switchboards and operating with specific focus on energy solutions for local communities, hotels and tower projects; United Arab Chemicals Carriers (UACC), a shipping company intending to operate 27 tankers in the Clean Petroleum Products and Commodity Chemical markets; and Depa United Group, a holding company for a group of complimentary subsidiaries whose services include finishes for floors, walls and ceilings, refurbishment and upholstery of furniture and case goods and design coordination.
By Albert Alba
© The Business Weekly 2007
