Leighton Holdings (LEI) rose by as much as 3.5% today after it announced that its wholly owned subsidiary Leighton International has entered into a long-term joint venture to undertake contracting of major engineering and construction projects in Abu Dhabi.
Leighton said the arrangement is with Gulf Leighton and Abu Dhabi's Tourism Development and Investment Company (TDIC) and would create a major new force in the United Arab Emirates construction scene.
Projects covered under the 50:50 JV include the construction of a 6.5 kilometre road which will connect the Shahama district and the Saadiyat island which is being transformed into a signature tourist destination. A hotel development is also covered under the agreement.
Leighton said the agreement is expected to generate annual revenue from a minimum of US$270 million in the first year, to a minimum of US $1.4 billion in year five.
"The size, scope and complexity of some of the projects we are planning here require world-class contractors who prioritise environmental sustainability in the design and construction processes," said CEO of TDIC Lee Tabler.
"Leighton is regarded as a world-leader in its field and is a good fit for what we are trying to achieve"
Managing Director of Leighton International and Al Habtoor Engineering, David Savage, said the agreement represented one of the group's most significant partnerships, and would underwrite the company's business in Abu Dhabi for the foreseeable future.
"TDIC is one of Abu Dhabi's largest, most respected developers," Mr Savage said.
"We are delighted that it has selected us as its partner for its exciting development programme."
"We look forward to working with TDIC to develop Abu Dhabi into one of the world's leading tourist and cultural destinations."
This news comes a day after Leighton International announced that it had been awarded $740 million of new work in Abu Dhabi and Dubai through its 45% owned associate Al Habtoor Engineering.
Leighton has secured the contract for the construction of the new JAFZA convention centre in Dubai and two hotels on Yas Island in Abu Dhabi worth a total of US$130 million.
"These new contracts are further evidence of the tremendous opportunities for growth for Leighton International in the Arabian Gulf region and the United Arab Emirates in particular," said Mr Savage.
By midday, Leighton was trading at $64.89, a gain of $2.20.
