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| 15 January, 2018

Why Carillion bankruptcy won't affect UAE projects

JV partner Al-Futtaim has resources to cope up with this situation, say analysts

Image for illustrative purpose.
Unoccupied construction sites are seen in Dubai's Marina area.

Image for illustrative purpose. Unoccupied construction sites are seen in Dubai's Marina area.

REUTERS/Steve Crisp
Ongoing projects under the Al-Futtaim and Carillion joint venture in the UAE are unlikely to take a hit from the bankruptcy declared by the British partner on Monday, analysts said.

Abdul Kadir Faizal, CEO, Ere Homes, said Al-Futtaim is a big and well-diversified company and has resources to cope with this situation.

Another analyst, asking not to be named, said projects being developed by the joint venture are unlikely to take a hit because Al-Futtaim has the capacity to handle the situation.

He said there could be additional pressure on the Dubai partner's engineering division as they are expected to carry out the current contracts. In such a scenario, he said the local arm of the global player absorbs the resources and carries on with the works.

According to the company's website, Al-Futtaim owns a 51 per cent stake and the UK construction firm owns 49 per cent in the joint venture.

Burdened with Dh7.7 billion debt and liabilities, Carillion filed for bankruptcy on Monday. This is one of the biggest British corporate failures in recent years.

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According to Al-Futtaim Carillion (AFC) website, the group's major projects include Al Jalila Hospital, The Lofts tower, Dubai Festival City, New York University in Abu Dhabi, Al Raha Beach, Yas Island, Dubal and Al Bahr Towers.

At the time of going to print, Khaleej Times was still awaiting response from Al-Futtaim Carillion on the impact of the bankruptcy on projects in the UAE.

In March 2017, Expo 2020 Dubai awarded a Dh2.2 billion contract to Al-Futtaim Carillion to deliver the Theme districts and Public realm works for the World Expo 2020 site situated in Dubai South. The contract is scheduled for full completion in mid-2019.

 

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