UAE-based Al Shafar General Contracting Company (ASGC) has entered an understanding with British construction and engineering company Costain for the acquisition of around 41.6 million shares (15.2 percent) in the company at an investment of £25 million ($31 million).
This strategic financing from the Emirati group comes as a boost to Costain which is raising £100 million ($124 million) from the capital markets in a share issue underwritten by Liberum Capital and Investec Bank (who are acting as Joint Global Coordinator, Joint Bookrunner and Joint Corporate Broker) and HSBC as Joint Global Coordinator and Joint Bookrunner.
According to Costain, £80 million is being raised through a firm placing, while the rest of £20 million will be done through placing and open offer of, in aggregate, 166.6 million new ordinary shares at an issue price of 60 pence per share.
A vertically integrated construction group based in Dubai, ASGC is best known for producing turn-key special projects in the UAE. One among the 26 companies within the Al Shafer Group, it owns the majority of the group’s supply chain and utilizes mostly in-house resources.
On the strategic deal, Costain said it aims to use the net proceeds from the capital raising for general corporate purposes.
“This capital boost will allow us to demonstrate our increased financial capacity to clients, providing a competitive advantage in a sector where clients and suppliers are increasingly scrutinizing their partners’ balance sheets,”
– Costain Spokesman.
“This will help us to take advantage of business growth opportunities through the investment required in bid costs and innovation and technology, enhancing the execution of the group’s leading-edge strategy to grow higher-value services with increased margins,” he added