Exclusive: ALEC’s CEO Kez Taylor discusses $100mn TARGET Engineering acquisition
CEO tells Big Project ME that TARGET acquisition will allow the Dubai-based contractor to target the clean energy sector thanks to its capabilities
Dubai-based contractor, ALEC Engineering & Contracting – part of the Investment Corporation of Dubai – recently announced that it had signed a share purchase agreement to acquire TARGET Engineering Construction Company, the oil and gas EPC contractor that was formerly part of Arabtec.
The agreement will see ALEC acquire 100% of TARGET, enhancing its resources significantly through the latter’s 11,000-strong workforce, marine vessels, and fabrication facilities. In addition, the deal includes TARGET’s controlling stake in IDROTEC srl, the Italian specialised marine design engineering firm.
With the acquisition set to have a significant impact on the future and performance of both entities, Big Project ME caught up with Kez Taylor, CEO of ALEC, for insights into the thinking behind the deal, and the significance of it in terms of both companies’ strategy.
“We saw a great opportunity. TARGET have a very good reputation, a very good name in the oil and gas, and marine engineering sectors,” he told Big Project ME in an exclusive interview. “We also saw great potential in the clean energy sector, and in the transition from carbon to clean energy. They’re a very good fit for ALEC in terms of diversification.”
At around US$100 million, the acquisition is the biggest ALEC has made, Taylor stated, adding that TARGET’s performance will make up around 30% of future turnover targets. Together, the companies will have a joint turnover of nearly US$2 billion, although TARGET will continue to operate as an independent entity.
“TARGET will be run by the management that are within that business. We’ll look at synergies between the two companies, obviously to improve things both ways, but it will be a separate business reporting to ALEC,” he adds, while also explaining that the acquisition was financed partly out of debt, with the remainder coming from the capital ALEC has put in.
“It’s a good deal for us. Over the next five years, we see both ALEC and TARGET doubling in size over the next five years. Both businesses are going through a significant growth phase, and there’s a lot of work around, for us, at the moment between Saudi Arabia and the UAE, in particular. There’s going to be significant investment in the oil and gas, marine, and future energy businesses,” he said.
With the regional emphasis on diversifying the energy mix, Taylor pointed out that both Saudi Arabia and the UAE have committed to Net Zero Carbon by 2050. In order for that to happen, there needs to be significant investment over the next 30 years, which will lead to significant opportunities, he added.
However, for the immediate future, the plan is for TARGET to continue operating independently and as normal, particularly given its strong pipeline of ongoing and upcoming projects.
The company’s customer base is comprised of leading Oil & Gas companies, major EPC (Engineering, procurement, and construction) contractors, government entities and property developers. Amongst the noteworthy projects that it has successfully completed include work on ENEC’s Barakah Nuclear Power Plant, ADNOC Gas Processing’s Ruwais LNG Terminal, Saudi Aramco’s Abqiq plant, and ENOC’s Jebal Ali Refinery expansion.
Its portfolio also includes current active projects such as Borouge 4 and Delma B in joint venture for ADNOC, and IGDC for ADGAS.
“We’re going to allow them to operate, but we’ll look at wherever we can innovate and improve, and we’ll do that – on both sides of the business.
“If you look at it, while they are two different businesses, there are a lot of common elements. So, what I think we’ll do is look at who’s best in class, whatever the sector, and then look at synergising those common elements moving into the future.”
Finally, Taylor stated that with the acquisition now completed, he tells Big Project ME that the company’s focus in the immediate future will be on the growth phase for both businesses.
With ALEC bringing a strong financial position, world-class project execution capabilities, and leadership to the table, TARGET will be able to develop its growth plans for Middle East and deliver best-in-breed EPC and specialist marine services to a wide range of entities.
“What we’re looking at doing is consolidating over the next period. We are not necessarily looking at going on an acquisition drive. We’ve made this move, we’ve invested a lot in it, and on other things such as LINQ, and what we’ve really got to do over the next period is make it work.”
