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Global contractor is back at home

Orascom Construction: coming full circle to build Egypt a brighter future

A multinational construction and engineering contractor, serving public and private clients in the infrastructure, industrial, and commercial sectors, Orascom Construction is active across the Middle East and North Africa (MENA) region, as well as in the United States and the Pacific Rim. In March 2015, it spun off from OCI NV and is now a Dubai International Finance Centre company, listed on NASDAQ Dubai and the Egyptian Exchange (EGX).

Founded in 1950 by Onsi Sawiris, the patriarch of Egypt’s wealthiest family, what would become the Orascom business empire started out as a small building firm. Nationalisation in 1961 led Sawiris to leave the country, first for Libya and then Saudi Arabia, before coming home in 1976. Orascom first opened shop overseas, in the US, in 1985 and, by 1990, had grown into Egypt’s leading privately owned construction conglomerate.

When Onsi’s youngest son, Nassef Sawiris, took over in 1995, he diversified into related businesses, like building materials and cement. By 1998, he consolidated and rebranded its interests as Orascom Construction Industries (OCI) and, a year later, launched a €550m IPO on the EGX, becoming the market’s biggest listing overnight. While Nassef’s brothers set up billion-dollar tourism and telecoms businesses, OCI built the tenth-largest cement producer worldwide, which sold for €11bn in 2008, and moved into fertilisers.

After a fiscal dispute with the government led by deposed president Mohamed Morsi, OCI relocated to the Netherlands in 2013, via a buyout by OCI NV. It only returned to Egypt, following the arrival to office of President Abdel Fattah Al-Sisi in June 2014 as Orascom Construction, after demerging earlier this year. Today, Orascom Construction has come full circle, back to its roots in construction and the country of its birth, as one of the most visible figureheads of the resurgent Egyptian economy under the Al-Sisi administration.

Last November, after winning its tax appeal, Nassef Sawiris said Orascom would once again be making major investments in Egypt, a huge vote of confidence in the country’s prospects that investors have been waiting for since 2011. Its first project, announced the same month, is a joint venture with Abu Dhabi’s International Petroleum Investment Company for a €2.75bn, 3 GW coal-fired power plant, near El Hamarawein on the Red Sea.

“We are now looking to invest in infrastructure, power plants, water, and wind,” confirms Osama Bishai, Orascom Construction’s CEO, who has been with the company for the last three decades. “We hope that, in a few years, we have another portfolio of businesses with which we can create value for our shareholders. We are present in areas where infrastructure is underdeveloped: Egypt, Algeria, and Saudi Arabia.”

In June, Orascom Construction completed the first, fast-track phase of the new West Damietta power plants two weeks ahead of schedule, adding 250 MW of capacity. The plant will eventually provide 500 MW, while a second plant at Assiut will contribute 1,000 MW. In the last two months, the company has already delivered 925 MW, a significant share of the 30 GW Egypt aims to add to the national grid by 2020.

But that’s less than 10% of what will be produced by the world’s largest combined-cycle, gas- powered plants, which Orascom Construction will be building as part of a consortium with Germany’s Siemens, on behalf of the Egyptian Electricity Holding Company. Orascom will construct two of the three plants – with a combined capacity of 9.6GW – as part of a €8.2bn energy deal that will add 50% extra to the nation’s electricity supply.

“We have a good business model,” Bishai insists, “which depends not only on our construction capabilities, but also on our ability to invest. We are focused on the things we do best and have a very good corporate finance team. That gives us a different angle compared to normal contractors. We have an investor mentality and create the best value for our shareholders. That is really our driver. We are proud of our quality, as our reputation is the only thing we have.”

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