The performance of Khadem Al Qubaisi, chairman both of Arabtec and its significant shareholder Abbar Investments, was something of a tour de force at the grilling by UAE and international media on Wednesday.
For the best part of an hour, he faced questions as tough as it’s possible to put to such a pillar of the Abu Dhabi establishment, and he gave as good as he got.
The essential messages were: that Aabar remains fully committed to Arabtec (perhaps to the extent of buying more shares); that all the grand projects of the past year or so are going ahead as planned; but that Arabtec intended first to get it right in its core business – construction. They were heard loud and clear by investors, who duly marked the shares up yesterday.
He also made a clear commitment to greater transparency at the company, which has suffered so much from opacity and uncertainty, as reflected in its roller-coaster share performance over several weeks.
It was a pity, then, that he was unable to be fully transparent on some key issues regarding Arabtec’s share register, which if not addressed will continue to hinder efforts to get back to some kind of normality, both for the company and for the UAE markets that have been tainted by Arabtec’s misfortunes.
Mr Al Qubaisi did, however, drop one piece of information like a bombshell at the conference. He said that the 28.8 per cent stake held by Hassan Ismaik had been owned by the former chief executive for some time.
This indeed was news. Previous declarations had put Mr Ismaik’s stake at 8 per cent; it was the revelation that in fact he owned 20 per cent more that began the shares’ tailspin a few weeks back.
Mr Al Qubaisi explained: it was a decision of the regulator, the Securities and Commodities Authority (SCA), to "gather" all the shares linked to Mr Ismaik but held "under different names or different people" that caused the apparent jump in his holding.
That fact immediately raises three further questions: When did Mr Ismaik buy the shares? What price did he pay for them? And how did he have the resources for such a significant outlay?
Even at yesterday's share price, which is 45 per cent down from the high this year, Mr Ismaik's stake is worth some US$1.2 billion. There is little in his background – real estate in Abu Dhabi and his native Jordan, lower-league German football club ownership – that explains the sudden wealth that propelled him to the title of "Jordan's first billionaire", as Forbes magazine described him recently.
Mr Al Qubaisi's revelation immediately raises other questions, this time for the Dubai Financial Market, where Arabtec shares are traded, and its regulator, the SCA. When and by what process did they realise Mr Ismaik's shareholding was bigger than previously declared? What prompted them to finally "gather" the shares together? Who were the previous nominal owners?
Non-declaration of significant shareholdings is a breach of both organisations’ rule books. Is any sanction going to be applied to Mr Ismaik if it turns out there has been such a breach?
The answers to these questions have a material affect on the Arabtec share price, because they will help to decide what ultimately happens to Mr Ismaik’s stake, which at the moment is viewed as an “overhang” in the market. If the intention is to sell the stake as a bloc, it raises the issue of whether the “different names and different people” Mr Al Qubaisi referred to have any right to the proceeds.
Who buys the stake is critical for Arabtec's future. Aabar, currently sitting around 20 per cent, has said it could buy more, but its scope of action is limited by the fact that it would have to bid for the whole company if it passed the 30 per cent mark.
Maybe that would be the most stabilising thing that could happen to Arabtec at the moment; or maybe another entity could emerge as a major investor alongside Aabar.
But the key word is transparency, and Mr Al Qubaisi’s commitment to it is admirable. Let’s start with some clarity on Mr Ismaik.
fkane@thenational.ae
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