Senaat, the state-owned industrial holding company, plans to invest Dh5 billion over the next two years to develop downstream industries and is considering an initial public offering of one of its units this year, the chairman said.
Abu Dhabi-based Senaat, which has invested more than Dh16bn developing the metals sector over the last five years, will finance the projects through 30 per cent equity and 70 per cent debt, said Hussain Al Nowais on the sidelines of a conference in Abu Dhabi.
“Recently our trend is towards downstream, industries which will use the raw materials coming from our main industries. We will be investing in pipes which are used for the oil and gas [sector] and we are also investing in the downstream industry,” said Mr Al Nowais. “The fact that Emirates Global Aluminium [EGA] is producing melted aluminium is encouraging us to look at the downstream aluminium [industry]: foil and [aluminium] extrusion … we are investing into that as well.”
EGA, which was formed from the merger of smelters Emal and Dubal, is currently the world’s fifth largest aluminium producer, with a combined annual production of 2.4 million tonnes.
The UAE is keen to attract investments into the industrial sector to diversify income away from oil, create a downstream industry and generate jobs for nationals. These initiatives include building a defence industry as exemplified by the merger of units of the Abu Dhabi investment firm Mubadala Development, defence firm Tawazun Holding and Emirates Advanced Investment Group into a new company called Emirates Defence Industries Company.
Senaat, which was initially considering selling the whole holding itself, changed its mind and decided to sell its units instead. It has appointed the lenders JP Morgan and HSBC to work on potential IPOs.
The firm, which owns the food company Agthia Group and material manufacturer Arkan Building Materials, is weighing up the public offering of two units, one this year and another next year, said Mr Al Nowais. He declined to name the companies. Both Agthia and Arkan are listed on the Abu Dhabi Securities Exchange.
“We are now looking at the possibility of IPOing specific industries like we did with Arkan, like we did with Agthia,” said Mr Al Nowais.
“It depends on market conditions, but at the end of the year it could be an option, perhaps one unit and one unit next year.”
Any decision to IPO will depend on approval from the top decision-making body in Abu Dhabi, the Executive Council, and other relevant authorities, he added.
Senaat has seven units which include the steelmaker Emirates Steel and cable manufacturing company Ducab, which is a joint venture between the Abu Dhabi and Dubai governments. It also has a 70 per cent stake in the Abu Dhabi-based oil services company National Petroleum Construction Company. The remaining 30 per cent stake is held by the international construction group Consolidated Contractors Company.
Senaat expects to report “good profit” for last year, he said, without giving details. The last profit figures for Senaat are for 2012, when it posted a 13 per cent fall in net profit to Dh1.3bn from a year earlier.
Senaat manages more than Dh25.3bn of industrial assets on behalf of the Abu Dhabi government, according to its website.
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