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|22 October, 2018

Egypt's Arab Contractors eyes $1.33bln in new contract work by 2020, ahead of unit's IPO - chairman

The company is involved in $200mln worth of contracts in the GCC region

A trader works at the Egyptian stock exchange in Cairo.

A trader works at the Egyptian stock exchange in Cairo.

REUTERS/Mohamed Abd El Ghany

Arab Contractors, the Egyptian construction and contracting company, forecasts it will win 24 billion Egyptian pounds ($1.33 billion) worth of new project contract work over the next two years, as it prepares to list a stake in its investment unit, the firm’s chairman said in an interview last week.

The Cairo-based firm, which is 90 percent government owned and 10 percent owned by private shareholders, plans to launch an initial public offering (IPO) for around 40 percent of its investment unit, Arab Contractors for Investments, on the Egyptian Exchange next year.

“The company, which has 40 million Egyptian pound [$2.23 million] capital, had been readying itself for a listing as part of the state IPO program by 2019 Q1,” Mohsen Salah El-Din told Zawya during an interview at the company’s headquarters.

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Once the investment arm’s ongoing restructuring has been complete, Salah El-Din said the goal is for it “to reach 80 million Egyptian pounds capital after listing”.

Capital gains in Egypt

Founded in 1955, Arab Contractors is one of the largest builders in Egypt and it is involved in a lot of high profile mega projects in its homeland.

The firm has invested 10 billion Egyptian pounds into residential and infrastructure projects at Egypt’s New Administrative Capital, located just east of Cairo.

It has finished 90 residential buildings as part of phase one, with 44 more in phase two, the chairman said. It is also working on the Alfatah Alalem mosque and the new 148,000 square metre parliamentary building, which is located on a 59 acre site which is currently 75 percent complete and due to be finished by the end of this year, the chairman said.

The company is also involved in the New Mansoura City, a 2.5 billion Egyptian pound coastal project which will see the construction of villas, residential towers and a cornish by the middle of 2019.

Of the 30 towers planned by 2020, Arab Contractors is working on five, while it has also started excavation work on 124 villas, the chairman said

The centerpiece of the new tourism city is the 4km-long cornish along the Mediterranean Sea, which the contractor started working on in late 2017.

“We had finished 800 meters out of 4 kilometres and plan to complete construction by end of 2018,” Salah El-Din said, adding it was currently working on finishing works such as cafes, walkways, seating areas and playgrounds.

Other projects as part of its pipeline of work at New Mansoura City include initial works for seven buildings at the North Delta Branch University and 52 residential building at the Dar Misr Housing project, which is 28 percent complete.

Mohsen Salah El Din, Chairman, Arab Contractors

Gulf focus

Moving away from home, Arab Contractors has a large footprint outside Egypt and has offices and employees in 29 countries, including the Gulf Cooperation Council (GCC) region, where Salah El-Din said it is currently working on around $200 million worth of contracts this year.

In Kuwait, the company was awarded a contract worth to build 500 villas a 55 million Kuwaiti dinars ($181 million) development in the East Teamaa area of the El Jahraa governorate.

“Serving 4500 person, built upon 391,000 square metres… the project execution period is 30 months, we started work 6 months ago, and supposed to be completed by 2020,” Salah El-Din said.

The chairman described the Kuwaiti market as “a promising one… with a huge amount of projects”. The firm recently completed work on the Middle East’s largest hospital, the 304 million Kuwaiti dinar, 1,200-bed Sheikh Jaber al Ahmed Al Jaber Al Sabbah hospital in Kuwait, where it started work in late 2009, and is also working on some mega transportation projects in the Gulf state.

Some of the road projects it is involved in constructing, which the Gulf state’s government hopes will help to address the country’s traffic congestion problem, include the 270 million Kuwaiti dinar El Jahraa Road project and the 179 million Kuwait dinar Al Nuwaiseeb Road project.

Elsewhere in the GCC, El Din said the company is working in the United Arab Emirates with an investment partner who has secured financing of 180 million UAE dirhams ($49 million) to build a series of residential towers.

It is also working on an 80 million Qatari riyal ($21.97 million) infrastructure project in Qatar and a 100 million Omani rial ($260 million) water desalination plant in Iraq in partnership with Japanese international cooperation agency JICA, he added

The firm’s extensive pipeline has helped boost its balance sheet. According to its most recent accounts, published in May 2017 and representing the 2016/2017 financial year, its revenue increased 13.68 percent to 20.192 billion Egyptian pounds, resulting in a net profit of 532 million Egyptian pounds.

(Reporting by Marwa Abo Almajd; Editing by Shane McGinley)

(shane.mcginley@refinitiv.com)

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© ZAWYA 2018