The head of Al Habtoor Group, one of the UAE's largest family businesses, says his group is owed more than Dh4 billion (US$1.08bn) for work long since finished, a frustration that he attributes less to the financial crisis than changes in business culture.
Khalaf al Habtoor, the chairman of the group, said his company has been trying for more than a year to collect payment for a number of completed projects.
"Most of [the clients] have the money. I don't know why they don't pay," he said. "There are only promises and no results on that promise. One day, if they don't pay we will have no choice but to take it to arbitration. What can we do? We need billions."
Mr al Habtoor's company built a number of hospitals, schools and hotels around the Emirates, including the Burj Al Arab hotel in Dubai. He declined to name specific projects for which his firm has not been paid but said they involved some of the biggest companies in the region and were "in excess of Dh4bn."
Family businesses play a huge role in the GCC economy, accounting for almost half of all private-sector employment and 40 per cent of non-oil GDP, according to the consultancy Booz & Company. But their operations are generally opaque, as private companies are not required to release financial statements and their leaders typically offer few details about their performances.
The news last month that Al Jaber Group was restructuring debts of up to Dh6bn raised some concerns that other family conglomerates could also be under stress. But analysts say most indications are that family businesses fared better than other companies in the region during the financial crisis, in part because of a conservative approach towards balance sheets and in part because they are widely diversified across a range of sectors.
This matches the global trend, where the Credit Suisse Family Index outpaced non-family firms by more than 15 per cent since 2005.
But analysts also say that UAE family businesses are at a critical point in their development, needing to manage growth carefully and develop sustainable long-term strategies.
"It is almost like a person that has grown very fast and kept the same clothes. The seams are starting to break," said Ahmed Youssef, a principal with Booz & Company in Dubai.
To that end, many firms, including Abu Dhabi's Al Masaood Group, are revamping and streamlining their operations.
Constantin Salameh, the chief executive of Abdulla Al Masaood and Sons, said: "I think all groups are doing it, but these adjustments are healthy."
For his part, Mr al Habtoor said that his company emerged from the crisis with no debt and that it gave many of its more than 40,000 employees raises and bonuses last year. He said that future projects would be funded out of the company's cash flow and that he was disinclined to use the leverage of bonds and bank loans.
At the same time, he argued that too much has been made of the debt restructurings under way at other companies.
"Everybody in the world, they restructure payments. Even the US has debts," he said. "I can't understand why they are making a big deal of it. That is common in banking, which is a partnership between you and the banker."
Mr al Habtoor, who founded the company in 1970, sold 45 per cent of his contracting business in 2007 to the Australian firm Leighton Holdings for $845 million. Analysts believe Leighton will have to write down the value of its investment by as much as $300m because of the continuing difficulty in collecting money owed by clients.
Mr al Habtoor said he longed for the days when contractors received cheques within days of requesting payment and that the problem of companies not honouring their commitments "must be tackled" at the governmental level.
He also said he believed government officials should consult more closely with business leaders as they craft the laws and policies that will have a direct impact on the economy.
"We will help them. We will not charge and we will give them an honest opinion because this is our country," he said. "We love this country and we are family with them."
breagan@thenational.ae
Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
COMPANY%20PROFILE
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Company%20profile
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KILLING OF QASSEM SULEIMANI
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Where can I submit a sample?
Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.
Collection centres in Abu Dhabi include:
- Abu Dhabi National Exhibition Centre (ADNEC)
- Biogenix Labs in Masdar City
- Al Towayya in Al Ain
- NMC Royal Hospital in Khalifa City
- Bareen International Hospital
- NMC Specialty Hospital, Al Ain
- NMC Royal Medical Centre - Abu Dhabi
- NMC Royal Women’s Hospital.
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Company Profile
Company name: Yeepeey
Started: Soft launch in November, 2020
Founders: Sagar Chandiramani, Jatin Sharma and Monish Chandiramani
Based: Dubai
Industry: E-grocery
Initial investment: $150,000
Future plan: Raise $1.5m and enter Saudi Arabia next year
DEADPOOL & WOLVERINE
Starring: Ryan Reynolds, Hugh Jackman, Emma Corrin
Director: Shawn Levy
Rating: 3/5
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
The British in India: Three Centuries of Ambition and Experience
by David Gilmour
Allen Lane
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Sheer grandeur
The Owo building is 14 storeys high, seven of which are below ground, with the 30,000 square feet of amenities located subterranean, including a 16-seat private cinema, seven lounges, a gym, games room, treatment suites and bicycle storage.
A clear distinction between the residences and the Raffles hotel with the amenities operated separately.
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
UAE currency: the story behind the money in your pockets
Teenage%20Mutant%20Ninja%20Turtles%3A%20Shredder's%20Revenge
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Profile of RentSher
Started: October 2015 in India, November 2016 in UAE
Founders: Harsh Dhand; Vaibhav and Purvashi Doshi
Based: Bangalore, India and Dubai, UAE
Sector: Online rental marketplace
Size: 40 employees
Investment: $2 million
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
Karwaan
Producer: Ronnie Screwvala
Director: Akarsh Khurana
Starring: Irrfan Khan, Dulquer Salmaan, Mithila Palkar
Rating: 4/5
COMPANY%20PROFILE%20
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