Arabtec Holding Co. (ARTC), the United Arab Emirates’ biggest construction company, surged the most in more than three years after Abu Dhabi’s state-owned Aabar Investments PJSC (AABAR) boosted its stake in the Dubai builder.
The shares soared 15 percent, the largest gain since October 2008, to 3.45 dirhams at the 2 p.m. close in Dubai. The stock led gains in Dubai’s benchmark DFM General Index (DFMGI), which advanced 2.4 percent. Aabar Real Estate now owns 5.13 percent of Arabtec, according to data posted on Dubai’s stock exchange. Aabar Petroleum Investments Co., which in 2008 sold its energy assets to state-owned Mubadala Development Co., holds 5.32 percent up from 5.28 percent last month.
“Now that a second Aabar entity has raised its head above the 5 percent parapet, speculation on further accumulation or an acquisition will be rife,” said Julian Bruce, the Dubai-based director of institutional sales trading at EFG-Hermes Holding SAE. “I would expect retail investors to jump on the bandwagon.”
Aabar canceled in 2010 a plan to buy most of Arabtec, a builder of the world’s tallest tower in Dubai, for an estimated $1.74 billion. It had offered to buy 70 percent of the company through the purchase of bonds that would have been exchanged for shares at 2.3 dirhams.
Arabtec has surged 117 percent this year on speculation investors are accumulating the stock amid bets it will benefit from regional infrastructure spending. That compares with a 25 percent gain for Dubai’s benchmark index. The volume of Arabtec shares traded today was the highest since Feb. 9.
“The question is, what level of ownership does Aabar want to reach, and will they be influencing the management of Arabtec,” said Sebastien Henin, who helps oversee $100 million at The National Investor in Abu Dhabi. “The raising of the stake is a clear signal of a possible intention to buy more.”
A unit of Arabtec in January won a 25-month contract valued at 561 million dirhams ($153 million) for expansion works at the Dubai International Airport. One of its units also won contracts in Abu Dhabi valued at 256 million dirhams.
Arabtec may post a 57 percent gain in first-quarter profit to 41.9 million dirhams, according the estimates of EFG-Hermes and National Bank of Kuwait, data compiled Bloomberg show.
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