Arabtec Chief Ismaik Quits After Market Punishes SharesZainab Fattah and Sarmad Khan
Arabtec Holding Co. Chief Executive Officer Hasan Ismaik resigned after the United Arab Emirates’ biggest listed construction company lost a third of its market value in less than two weeks.
Ismaik said he had stepped down and would consider selling his 28.84 percent stake in the company if he gets an offer. Arabtec board member Mohamed Al Fahim will take over as acting CEO, according to two people with knowledge of the matter who asked not to be identified because the information is private. An Arabtec spokesman declined to comment before a board meeting.
“If approached by any government entity to buy my stake, I would consider the offer,” Ismaik, who was appointed CEO in February 2013, said by telephone. He said he no longer holds any positions with the company.
Ismaik’s departure follows share-price declines on speculation ranging from the possible delisting of the stock to the CEO’s ouster. Arabtec suffered its worst weekly drop since March 2012 and is down 42 percent from a record 7.40 dirhams in May. Abu Dhabi state-run Aabar Investments PJSC, the company’s second-biggest shareholder, cut its holding last week, fueling concern that the builder may be losing government backing.
Acting Arabtec CEO Al Fahim currently heads the financial division at International Petroleum Investment Co. and he previously worked at Abu Dhabi National Oil Co., KPMG LLP in Dubai and HSBC Holdings Plc in London.
‘Abu Dhabi Support’
“The news should be taken positively as it will put an end to speculation,” Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC, said by e-mail. “We should see a rebound before any selloff again;
4.70 dirhams could be the target.”
Arabtec climbed 1.9 percent to close at 4.30 dirhams in Dubai trading today.
Ismaik’s resignation ends a 15-month stretch that was marked by a soaring share price and ambitious growth. The CEO announced plans to turn the company into a top 10 global contractor, expanding into areas including oil and gas and infrastructure. Arabtec formed a joint venture with Samsung Engineering Co. to provide engineering, procurement and construction services.
Even after the recent slump, Arabtec’s stock has doubled this year. The builder, which helped construct the world’s tallest tower in Dubai, signed an agreement in March with Egypt’s Defense Ministry to build 1 million affordable homes worth an estimated $40 billion.
The person in charge of the company is less important than its ownership, according to Nayal Khan, the head of institutional sales and trading at brokerage Naeem Holding in Dubai. “The only thing relevant is Abu Dhabi’s support for Arabtec and Aabar’s shareholding in the company,” he said by telephone.
Ismaik was named a non-executive board member in August 2012 before being appointed CEO. He’s also chairman of Al-Ashmal Real-Estate Investment Co. in Jordan and Abu Dhabi-based HAMG Group, among others. He owns 60 percent of shares of German sports club TSV Muenchen von 1860 GmbH & Co. KGaA.