By Rania El Gamal, Staff WriterBusiness News (Kuwait Times)

KUWAIT: Mushrif Trading and Contracting Co (MTCC) has announced a 100 percent capital increase from KD 3 million to KD 6 million yesterday at its General Assembly meeting, as a part of its expansion plans across the region.

Established in 1968 and specialized in providing contracting and building services to numerous key sectors of the construction industry, in seven different countries spanning from Saudi Arabia to Iran, Mushrif plans to concentrate its activities in the coming period on the markets of Kuwait, Qatar and the UAE.

‘On March 27, a preliminary agreement has been signed with Ithmar Capital, which is a UAE-based private equity fund,’ said Anthony Kyprianou, Deputy General Manager, Financial Services and Investment Division, KIPCO Asset Management Company (KAMCO), the financial advisor for Mushrif, yesterday at a business forum.

‘The shareholders approved to issue 30 million new shares of Mushrif representing 100 percent capital, which will be entirely subscribed by Ithmar at a 900 fils per share (a par value of 100 fils and a share premium of 800 fils),’ he added.

The gross proceeds of the capital increase will be KD 27 million, of which KD 16.4 million will be used to purchase a major construction business in the UAE.

Ithmar will help bring financial, operational, and strategic discipline to MTCC. ‘Ithmar might introduce about $1 billion of contracts in the coming three years,’ said Kyprianou adding that the deal is still being finalized.

Ithmar Capital has recently formed an international strategic alliance with 3i, a world leading investment company in private equity and venture capital, active from early stage to growth capital and buy-outs. This unique strategic alliance with 3i gives Ithmar a unique advantage in terms of proprietary deal flow and investment advice.

Mushrif held its first ‘Business Forum’ at the Kuwait Stock Exchange, following its assembly meeting, where company’s officials outlined Mushrif’s current operations and future plans. The forum is planned to be an annual event to enhance Mushrif’s transparency to its shareholders, potential investors, bankers and the public.

Mushrif’s revenues in 2006 reached KD 50.92 million, or 17.7 fils per share, from KD 28.9 million in 2005, recording a net profit of just KD 544,453 in 2006.

Nadeem Nazir, Director of Finance at Mushrif attributed the drop in profit to ‘one-off investments and future expansion costs.’ ‘(Our) rapid growth and operation put a huge strain on the financial resources,’ he said. Total expansion or start-up cost amounted to KD 2.24 million in 2006, pointed out Nazir.

The company grew at an annual growth rate of 28 percent (CAGR) over the past five years. Total assets amounted to KD 59.17 million, with a growth rate of 33.5 percent over the last five years.

Last year is considered an important step in Mushrif’s expansions and investments plans in the region. Rudi Fourie, Director Commercial at Mushrif, pointed out that 2006 was a year of investment when the company continued to consolidate its presence in Qatar, UAE, and Iran through its branches and subsidiaries. This was in addition to the expansion in the specialized segments of marine construction, piling and foundation works, electro-mechanical and oil and gas division.

More profit and positive investment plans are in the pipeline for Mushrif. ‘Most of the GCC countries are eager to utilise the current oil boom to diversify their economy, and encourage infrastructure development and increase tourism as a source of income,’ said Nazir.

Total government expenditure in Kuwait had a growth of 29.4 percent in the period between 2001-2005, while forecasts predict an average growth of 5 percent for the next five years with a 5 percent growth in the construction industry.

Mushrif’s expectations for 2007 are promising. ‘(The company’s) signed project in hand are worth KD 278 million (about $960 million),’ said Nazir. He also announced that the revenues for the first quarter of 2007 has amounted to KD 18.5 million, which is 105 percent more than the same period in 2006. ‘Based on the order book, we expect that our 2007 turnover will be approximately KD 100 million. This 100 percent increase is confirmed by our first quarter actual audited figures (of 2007),’ he added.

Mushrif has a presence in Qatar with two major contracts already secured and under execution. In Iran, the company has won a contract with the government of Iran, financed by the Islamic Development Bank. The project relates to Micro-tunneling for which there is a huge potential. In UAE, Mushrif has secured four projects with the leading clients, one being the central market project with Al-Dar Properties PJSC. Meanwhile, Mushrif is also in process of executing a project for Joint Operations in Khafji, Saudi Arabia. Total projects in hand in Kuwait amount to KD 168 million, while UAE projects total to KD 73 million, and current projects in Qatar amount to KD 36 million.