Abu Dhabi Fund Aabar Doubles Arabtec Stake; Shares Surge
Abu Dhabi fund raises stake to 10.45 pct - bourse filing; Arabtec share surge to close up 15 pct on stake boost; Investors expect further stake increases; Arabtec had increased holding to 5.3 pct in March
April 3, 2012 5:18 by kippreport
Abu Dhabi’s state-owned fund Aabar Investments has nearly doubled its stake in Arabtec to 10.45 percent, a bourse filing showed on Tuesday, making it the largest shareholder in the Dubai builder and boosting its influence.
Sovereign fund Aabar, which owns stakes in high-profile names such as German carmaker Daimler, commodities trader Glencore and Italy’s UniCredit, raised its Arabtec stake to 10.45 percent just weeks after it boosted its holding to 5.3 percent in early March.
Shares in Arabtec – which Aabar unsuccessfully tried to buy two years ago in a $1.7 billion deal for a 70-percent stake — closed up 15 percent at 3.45 dirhams ($0.94)on the Dubai bourse. The stock is up 89 percent year-to-date.
The latest stake increase was made through the fund’s Aabar Real Estate unit, the filing showed, while the March purchase was made via its Aabar Petroleum Investments arm.
“Aabar Real Estate and Aabar Petroleum Investments are being treated as separate companies. According to (the Emirates Securities and Commodities Authority), these are transactions by different groups,” said an Arabtec official who refused to be named.
“Our understanding is that Aabar is not the type of company that would be interested in a controlling stake.”
Aabar was not immediately available for comment.
Arabtec, the largest builder in the United Arab Emirates by market value, saw a three-fold rise in fourth-quarter net profit last month.
Recently, the firm was awarded a $153 million contract for the expansion of the Dubai International Airport and also won three contracts in neighbouring Abu Dhabi for 256 million dirhams.
“Aabar as the largest shareholder in the company could try to influence the management of the company and for the coming board meetings. It may try to materialize this increased stake in the shareholder structure,” said Sebastien Henin, portfolio manager at The National Investor in Abu Dhabi.
“Now, there is speculation that they could increase their stake further,” Henin added.
Last month, Arabtec’s chief financial officer said the firm had no plans to renew talks with Aabar about taking a stake because its funding needs had eased.
Dubai’s property sector, which went through over three years of slowdown sparked by the 2008 global financial crisis, is showing some signs of stability this year. However, neighbouring Abu Dhabi is still struggling despite being less affected by the global crisis initially.
Aabar, which is involved in some master developments across Abu Dhabi, has cut about a third of its staff amid the continuing downturn. Abu Dhabi developers have been forced to cancel projects and restructure their huge pile of debt.
Last month, Abu Dhabi’s largest real estate firm Aldar Properties said it is considering a merger with rival Sorouh Real Estate in a state-backed tie up. More consolidations are expected in the year. ($1 = 3.6730 UAE dirhams) (Reporting by Dinesh Nair, Praveen Menon and Nadia Saleem; Editing by Amran Abocar)