Tuesday, Apr 03, 2012
--Aabar Real Estate holds a 5.13% stake in Arabtec, Aabar Petroleum Investments Co. owns a 5.32% stake
--Stake hike may boost Aabar influence over Arabtec management, says analyst
--Brighter prospects seen for Arabtec in the U.A.E. capital
(Recasts, adds analyst comment, background throughout.)
By Nikhil Lohade
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Aabar Investments has raised its stake in Arabtec Holding (ARTC.DFM) to more than 10%, making it the single largest shareholder in the Dubai-based company.
Abu Dhabi government-owned Aabar, after scrapping a deal in 2010 to take a majority stake in Arabtec, is now expected to wield substantially more influence over the construction firm and may further boost its prospects in the U.A.E. capital.
Aabar Real Estate holds a 5.13% stake in Arabtec, a Dubai bourse filing showed, while Aabar Petroleum Investments Co. owns a 5.32% stake--slightly up from what it held according to a filing early March.
"The stake increase makes Aabar the biggest shareholder in Arabtec, which will allow it to exert more influence on the management of the company," said Sebastien Henin, portfolio manager at The National Investor. "The sharp stocks rally obviously indicates that investors are expecting Aabar to further increase its stake, while an association with the Abu Dhabi-based company also boosts Arabtec's prospects in terms of opportunities in the UAE capital".
Arabtec shares closed limit up 15% at AED3.45 Tuesday on the Dubai market. The stock has more than doubled this year on good volumes.
Arabtec's chief financial officer said last month the company has no plans to renew discussions with Aabar about the Abu Dhabi sovereign fund further raising its stake. Ziad Makhzoumi had however noted that this didn't rule out possible fluctuations in Aabar's holding as the fund was free to buy or sell shares on Dubai's stock exchange.
The relationship between the two companies is viewed mostly positively by analysts as it opens up new opportunities for Arabtec, which is looking to diversify away from its struggling home market.
Activity in the Dubai real estate market has mostly stalled since the global financial crisis in 2008 sent property prices in the emirate tumbling by more than 50%.
Aabar's increased involvement in Arabtec could herald expansion of Arabtec's Abu Dhabi backlog, according to EFG Hermes. New contracts could either be awarded by Aabar itself, or by other Abu Dhabi entities related to Aabar, EFG told clients recently in a note.
An Arabtec unit in January was awarded three small contracts in the U.A.E. capital worth a combined AED256 million.
-By Nikhil Lohade, Dow Jones Newswires, +9714 446 1694, nikhil.lohade@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
03-04-12 1134GMT
