June 19 (Bloomberg) -- Shares of Drake & Scull International rose to a record on speculation the Dubai-based construction company may be awarded more contracts in Saudi Arabia.
The stocks climbed 5.6 percent at the close in Dubai to 1.90 dirhams, the highest since they began trading in March 2009. The shares advanced 15 percent since June 17, when the company said its board approved issuing convertible bonds to a “strategic investor,” without providing further details. Drake & Scull’s spokesman couldn’t immediately be reached for comment today. Dubai’s DFM General Index added 1.6 percent.
The strategic investor is Lamar Investment and Real Estate Development Co., a family-owned construction business in Saudi Arabia, Nayal Khan, the head of institutional sales and trading at brokerage Naeem Holding in Dubai, said in a note to investors this week. Lamar Investment awarded Drake & Scull a 1.73 billion-riyal ($461 million) contract in May 2013 to complete the Lamar Towers project in Jeddah.
“Investors believe the new investor will bring additional business to the table as the Saudi Arabian market has been a growth driver for DSI,” Khan said by e-mail today.
Construction companies in the United Arab Emirates have benefited from a real estate rebound in Dubai and increased government spending across the Gulf region. Drake & Scull had a total order backlog of 12 billion dirhams ($3.27 billion) at the end of December with growth driven by operations in Saudi Arabia and the U.A.E.
The shares have increased 32 percent so far this year, trailing the Dubai index’s 36 percent advance in the same period.
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