Arabtec Holding Co., the United Arab Emirates’ biggest construction company by market value, won a 453 million dirham ($123 million) contract from OAO Gazprom to build Europe’s tallest office tower in St. Petersburg.
The Dubai-based company and Gazprom unit Okhta Center will begin the first phase of construction for the 463 meter-high (1,519 foot) Gazprom Tower, Arabtec said in a statement to the stock exchange today. The headquarters of Russia’s natural-gas exporter and oil arm will be located in the tower, Arabtec said.
Arabtec has been expanding outside of Dubai after profit fell in each year following the 2008 property-market crash in the emirate. The builder, which derived all revenue from the Gulf Cooperation Council last year, said today it expects to win more projects in Russia. Arabtec’s Target Engineering Construction unit also won 270 million dirhams of contracts in Abu Dhabi and Qatar, the company said in a separate statement.
Arabtec’s shares have surged 66 percent this year on bets the builder will benefit from regional infrastructure spending, outpacing the 17 percent advance in the benchmark Dubai Financial Market General Index. Abu Dhabi government-controlled Aabar Investments PJSC raised its stake in Arabtec this year to 21.6 percent, fueling bets it’s poised to win more contracts in the U.A.E. capital, holder of most of the U.A.E.’s oil reserves.
Arabtec shares gained 0.4 percent at 10:08 a.m. in Dubai after jumping 3.3 percent yesterday, giving the company a market value of 3.97 billion dirhams.
Abu Dhabi Projects
The company in June won a contract valued at about $3 billion to build a terminal at Abu Dhabi Airport along with partners including TAV Insaat of Turkey. The second phase of the five-year project in Russia includes two more buildings and other facilities, Arabtec said today.
Gazprom in 2010 won final approval from the Russian government to build the tower as it relocates from Moscow, even after the project faced a public outcry from protesters who said the building would spoil the city’s historic skyline. The tower was initially designed to become Europe’s tallest skyscraper
Arabtec, which has the fourth-heaviest weighting on Dubai’s gauge, may post a 72 percent slump in third-quarter profit to 11 million dirhams, according to the median estimate of three analysts on Bloomberg. The shares are trading at 17 times estimated earnings compared with 10.5 times for the Dubai benchmark.