Abu Dhabi investment firm Aabar and U.A.E. construction company Arabtec are looking to step up their investments in Egypt, the chairman of both entities announced Sunday, underscoring the deepening ties between the two countries.
Egypt, under President Abdel Fattah alSisi, is trying to resurrect its economy through a series of overhauls and by luring back foreign investors. At an economic summit two weeks ago, Gulf states, including the United Arab Emirates, pledged $12 billion in support of Egypt’s government. And several prominent U.A.E. businesses, including real-estate and financial-services firms, simultaneously signalled their intentions to expand in Egypt.
“For us [Arabtec], for Aabar, the future is really Egypt,” Khadem Abdulla Al Qubaisi, chairman of both Arabtec and Aabar, said in an interview with The Wall Street Journal.
“Egypt will play a big role in our portfolio in the future and Egypt, with respect to the challenges, is really a promising country,” Mr. Qubaisi said.
He cites the country’s large population—with close to 90 million souls Egypt is the Arab world’s most-populous nation—and the rising need for infrastructure and housing as reasons for his optimism.
Aabar last year bought a stake in Cairo-based real-estate firm Palm Hills Developments. Arabtec, of which Aabar owns around 36%, is also involved in a large housing project in the North African country. Mr. Qubaisi said Aabar is pursuing not only investment opportunities in real estate, but also in infrastructure and midstream oil and gas operations.
Mr. Qubaisi said he hopes soon to start phase one of the housing project that would initially involve the construction of 100,000 units. Arabtec will work with local contractors such as Orascom Construction to build those middle-income houses and is currently in talks with banks to secure between $100 million and $200 million to kickstart the first part which is expected to take five to seven years to complete.
Arabtec’s focus on Egypt, as part of a regional expansion plan in its domestic market and Saudi Arabia, appears to be a break with the strategy spelled out by the company’s former chief executive, Hasan Ismaik, who aspired to turn Arabtec into an international leader through large-scale acquisitions.
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“We will not try to grow just like that without strategy,” Mr. Qubaisi said. “You may see some joint ventures here and there, alliances here and there, but to think about acquisitions, [multi-billion-dollar acquisitions], no, this will not work, this will not happen,” he said, adding Arabtec laid off its mergers-and-acquisitions people during a recent restructuring.
Arabtec has appointed an internal candidate as new chief executive of its construction business and it is still looking for a permanent replacement for current acting chief Mohamed Al Fahim, Mr. Qubaisi said.
Aabar, which itself is owned by Abu Dhabi sovereign wealth fund International Petroleum Investment Co., also holds stakes in Italian bank UniCredit, Malaysia’s RHB Capital and Richard Branson’s Virgin Galactic space project.
Source: The Wall Street Journal
