Arabtec Holding Co. tumbled to the lowest since March, leading declines on Dubai’s index, after the company fired hundreds of employees, according to people familiar with the matter.
Shares in the United Arab Emirates’ largest listed construction company retreated 9.9 percent to 3.46 dirhams at the close in the emirate, after plunging the maximum permissible yesterday. Shohidul Ahad-Choudhury, Arabtec’s head of mergers and acquisitions and a former Deutsche Bank AG executive, was among those dismissed, according to a person familiar with the situation. The DFM General Index entered a bear market after it declined 4.3 percent to 4,296, a 20 percent drop from a peak in May.
Hundreds of employees have been fired since the departure of former chief executive officer Hasan Ismaik last week, three people familiar with the situation said, asking not to be identified because the information is private. Arabtec, which has the fifth-highest weighting on Dubai’s index, has plunged 48 percent so far this month and 53 percent from a record 7.40 in May. Abu Dhabi state-run Aabar Investments PJSC cut its stake to 18.85 percent as of June 11 from 21.57 percent, stoking speculation the builder was losing government backing.
Investors are selling Arabtec because there’s uncertainty surrounding its governance and ability to “execute their pipeline of projects effectively with so much internal strife,” Ramez Merhi, director of asset management at Dubai-based Al Masah Capital, said in e-mailed comments. “This looks as if it could have been a fight for control of the company and Aabar won.”
Ismaik is still the single largest shareholder in the company with an almost 29 percent stake. He said on June 18 that he would consider selling his shares in the company if he gets an offer from the government. Arabtec board member Mohamed Al Fahim was appointed acting CEO following Ismaik’s departure.
“The company must be forced to come up with an announcement to ease tension among the investors, mainly the small investors,” Wadah Al Taha, chief investment officer of Dubai-based Al Zarooni Group, said by phone. “This is affecting the sentiment.”