Arabtec Gains After Aabar Weighs Stake Increase: Dubai Mover

Arabtec Holding Co. (ARTC) rose after its second-biggest shareholder Aabar Investments PJSC said it may increase its stake in the company that helped build the tallest tower in the world.

Shares in the United Arab Emirates’ largest listed construction company jumped 6.3 percent to 3.52 dirhams at the close, bringing its three-day advance to 35 percent, the most since February 2009. Khadem Al Qubaisi, chairman of both companies, said at a press conference after close of trading yesterday that Aabar was considering buying more shares in the builder.

Abu Dhabi state-run Aabar cut its holdings in Arabtec to about 19 percent in June from almost 22 percent, stoking speculation the company was losing government backing. Arabtec was at the heart of Dubai’s selloff last month, as Chief Executive Officer Hasan Ismaik resigned and it dismissed staff. Dubai’s gauge, the world’s best performing in dollar terms this year, entered a bear market on June 23 and posted its worst month in more than five years, losing 22 percent of its value.

“The important message from Arabtec is that it has strong backing from Abaar Investments and that the company will focus on its core construction business,” Montasser Khelifi, senior manager for global markets at Quantum Investment Bank Ltd. in Dubai, said by e-mail. “There are some questions still unanswered as there was no clarification on former chief executive Hassan Ismaik’s stake in the company and the number of recent job cuts.”

The company that helped build Dubai’s Burj Khalifa was the second-most traded stock on the DFM General Index (DFMGI) today, as the gauge advanced 0.2 percent to 4,399.64.

Easing Concerns

Al Qubaisi said the company’s shares will not be removed from the exchange, no Arabtec projects have been canceled and the company has an order book of 26.2 billion dirhams ($7.1 billion). “Positive” second-quarter earnings are expected to be released by the end of the month, and the company will focus on construction in Egypt, Saudi Arabia and the U.A.E., he said.

Arabtec’s press conference “did a great deal to ease investor concerns,” Nayal Khan, head of institutional sales and trading at the Naeem Holding brokerage in Dubai, said by e-mail today. “These are positive developments for Arabtec and the U.A.E. market in general.”

Ismaik, who resigned from Arabtec June 18, is still the largest shareholder in the company with a stake of almost 29 percent. He said June 23 he had received three offers from government entities and private investors for the shares. Arabtec executives, including the chief operating officer and head of risk, were among hundreds of employees dismissed since Ismaik’s departure, people with knowledge of the matter said last month.

To contact the reporter on this story: Sarmad Khan in Dubai at skhan170@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net James Doran, Matthew Brown

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