Abu Dhabi's GHC Plans $1.58 Billion Industrial Investment

Abu Dhabi's GHC Plans $1.58 Billion Industrial Investment

Investment in steel, aluminium and pipes; GHC 2011 net 1.5 bln dhs, up 15 percent; GHC appoints BNP Paribas to arrange $600 mln loan

April 22, 2012 10:17 by kippreport

Abu Dhabi government-owned General Holding Corporation (GHC) plans to invest 5.8 billion dirhams ($1.58 billion) in the short-term in three industries to boost manufacturing as the oil-rich emirate tries to diversify its economy, its chairman said on Saturday.

The plans include 3 billion dirhams to expand capacity at Emirates Steel, 800 million dirhams in downstream aluminium extrusion and 2 billion dirhams in manufacturing seamless pipes for the oil and gas industry.

GHC, which has industrial assets totaling 23.7 billion dirhams, has interests in sectors including steel, oil and gas fabrication, cables, food and building materials. It is eyeing new industries such as aluminium and copper.

“Our strategy is to help speed industrial growth in Abu Dhabi which is targeting a 25 percent contribution from industry to the emirate’s GDP by 2030. Today, it is below 15 per cent,” Hussain al Nowais told reporters.

Financing for the investments will be a combination of debt and equity, he said, adding GHC plans to raise $600 million in project finance over two years. It has appointed BNP Paribas as financial advisor.

Last year GHC borrowed 660 million dirhams ($180 million) from banks and invested 2.7 billion dirhams in various industries.

“Our debt-equity ratio is 1:1 and we have cash generated from profit. Debt could include bank borrowing, export credit agencies or even bonds,” he said.

GHC also said it made a net profit of 1.5 billion dirhams in 2011, up 15 percent on the previous year, driven by sales and cost control. The profit came largely from two of its flagship firms, Emirates Steel and National Petroleum Construction Company (NPCC).

GHC, set up in 2004, owns a total of eight companies in the industrial sector, two others of which are listed on the Abu Dhabi Securities Market (ADX).

It may consider one or two more companies for a public offering in the short-term, once they achieve their targets, said Al Nowais.

Abu Dhabi, capital of the United Arab Emirates an OPEC member, is investing billions of dollars in industry, tourism and real estate as it diversifies its economy away from oil.
(Reporting by Stanley Carvalho; editing by Patrick Graham)