Abraaj Real Estate Fund invests in the Construction Sector

ATCC intends to invest in the contracting sector through acquiring and owning shares in one or more existing companies in the U.A.E, with the purpose of benefiting from the ongoing construction boom in the U.A.E in general, and Dubai in particular, which is expected to continue over the next few years.

The company will have a paid-up capital of AED 400 million, allocated over 400 million shares, with a par value of AED 1 per share. 55% of the share capital was offered to the public through an IPO, which had great success and was oversubscribed 74 times. The remaining 45% is held by the founders of the company. Abraaj is one of the 11 founding members with an investment of Dhs 40 million for a 10% stake in the company, making it the second largest shareholder.

The company will rely on a highly experienced management team in the contracting sector. In addition, the Board will comprise of Mr. Riad Kamal, a founding shareholder having extensive experience in the contracting business. Abraaj Capital will be represented on the board by Arif Naqvi, the CEO and Vice-Chairman of Abraaj Capital.

Abraaj made the acquisition through The ABRAAJ Real Estate Fund L.P., which was launched recently with a target capitalization of US$100 million. This is the first investment made by the Fund since its initial closing on June 30, 2004.

Simon Davies, chief financial officer and executive director at Abraaj, who is closely involved in The ABRAAJ Real Estate Fund L.P., said that the Arab Technical Construction Company offers an extremely attractive investment opportunity as it allows the fund to participate in the booming construction sector in the UAE. He said that the Fund would continue investing in such opportunities in the region.

"The Fund's objective is to achieve superior returns by making investments in a diversified portfolio of real estate developments and structured real estate investment opportunities in the region. We are looking at some very exciting prospects in this sector, which is flourishing supported by surplus liquidity, good products, and ongoing regulation and law reforms, that are offering greater protection for investors," Davies added.

The ABRAAJ Real Estate Fund L.P., which requires a minimum investment of US$1 million, targets drawdown of 25 percent of the commitments upon subscription. The rest of the drawdown will take place depending on demands for project investments over a four-year commitment period from the initial closing date of June 30, 2004.

The Fund is expected to invest the larger part of its capital in leisure, tourism and residential related projects and a lesser part in office, retail and industrial developments. It is expected to take up positions across the GCC and the Middle East and manage a diverse portfolio ranging from early stages of projects to structured deals, including securitization at the later stages.

The Fund intends to make 5 to 10 investments and targets an internal rate of return of 15 percent. Advisors to the Fund include Knight Frank LLP, WS Atkins, Asteco, Norton Rose and KPMG.