Dubai Group in talks for Lafarge Emirates stake sale, UAE
The Dubai Group is in talks to sell its 45 per cent stake in its UAE joint venture with Lafarge, according to reports by Reuters.
Lafarge Emirates Cement, set up in 2005, is restructuring and needs additional capital to help support the business, something Dubai Group is unable to provide due to its debts.
Lafarge Emirates Cement was set up as a joint venture between Lafarge, Dubai Group, part of conglomerate Dubai Holding, and the Fujairah government, an emirate in the Northern part of the UAE.
While sources declined to put a value on the stake sale, one said it would essentially represent the amount required to be injected into the company by the stakeholder – meaning Dubai Group might not receive a significant amount for the asset.
"The costs are more than the equity and they don't reflect the current price of cement. They need to put more equity in and while Lafarge should do, Dubai Group definitely doesn't have the money," said a separate source, a UAE-based banker.
The potential sale has generated interest from regional cement makers which are trying to cash in on a gradual recovery in the United Arab Emirates' construction sector.
"The sale has attracted several regional players. Lafarge sees the UAE market as a long-term bet and are keen to retain their stake, but Dubai Group has their own issues to deal with," the second source said.