The projects market is thriving in the Middle East as infrastructure spend grows, and regional governments increasingly see business opportunities in more environment friendly projects, said partners at Chadbourne & Parke in Dubai.
According to Sohail Barkatali, a partner at the firm’s Dubai office, Chadbourne & Parke was able to continue to participate in the large deals even as the overall market slowed down in the midst of the global financial crisis.
The firm has advised on projects ranging from Saudi Arabia’s ACWA Power International’s acquisition of a controlling stake in Jordan’s Central Electricity Generation Co, to the Oman government’s solar power independent water and power project (IWPP) and Kuwait’s debut Az Zour IWPP, which is considered to be one of the largest wastewater projects in the world.
“Two years ago, there was a slump in the project finance market. But it didn’t actually affect the big projects that were happening in the region, such as the major power deals,” he said. “We’re now finding that the overall projects market is beginning to pick up. But it’s not always an easy market in terms of closing deals and financing them.”
Barkatali said that banks have enacted tougher requirements, and lenders are stricter on the projects they are financing in addition to risk allocations. But a focus on building infrastructure in the region through power plants and water projects continues to drive business opportunities.
A shift in policy aimed at more socially conscious project investments, such as solar powered energy sources, is also creating more interest in the market. In Abu Dhabi, Masdar plans to invest $15 billion in renewable energy projects such as the world's flagship carbon-free city. Neighbouring emirate Dubai, likewise, announced plans to launch a $3.27 billion solar park aimed at generating electricity by the end of 2013.
“There is a move towards investing in environmental friendly businesses and technologies, which is more commercially driven,” said Daniel Greenwald, managing partner of the Dubai Chadbourne & Parke office. “The projects themselves have a number of motivations, including income, diversification, better use of petroleum resources, and environmental awareness.”
Chadbourne & Parke’s global managing partner Andrew Giaccia said the shift towards these projects has given the firm the chance to shine in the region, given its historical strength in renewable energy.
While project finance has certainly been a growth driver for the firm, Giaccia said Chadbourne & Parke has also expanded globally in other areas, including its corporate practice, dispute resolution, and debt capital markets. The firm recently opened an office in Istanbul, and is considering opening an office in sub-Saharan Africa also.
“The name that comes up most often in Africa is Johannesburg,” Giaccia said. Adding to his statement, Giaccia said that the firm, which is an active player throughout the continent, is trying to focus on where it would make the most strategic sense to locate its offices.
Further expansion into Asia is also on the radar, he said, with India, Singapore and Hong Kong being seen as key markets. ALB
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