Mushrif Trading & Contracting

16 December 2008

The Kuwait-based Mushrif Trading & Contracting is in a good position for expansion after relocating its headquarters to the UAE.

Mushrif Trading & Contracting Company has been active in the Gulf for 40 years.

With almost 10,000 employees, the company specialises in heavy civil works including major pipelines, roadworks, wastewater treatment plants and deep foundations.

According to figures from MEED’s Oil & Gas Contractor’s Survey 2008 (MEED 18.4.08), in 2007, the firm won contracts totalling $1bn, putting it ahead of Kuwaiti peers such as Combined Group ($770m) and Ahmadiah Trading & Contracting ($420m).

In September 2007, shares worth 50 per cent of the company were sold to UAE private equity firm Ithmar.


Mushrif is organised into three main business units that reflect its geographic focus: Mushrif National Company, which is based in Abu Dhabi; Mushrif Kuwait; and Mushrif Qatar.

Aside from these three companies, Mushrif owns specialist construction company Foundmar, which provides three main services: piling, micro-tunnelling and de-watering.

It is used by Mushrif for projects as well as acting as a subcontractor to other firms.

Mushrif has two further subsidiaries in which it holds 99 per cent stakes: Alliance Engineering General Trading & Contracting Company, for electromechanical, oil and gas work; and CRT General Trading & Contracting Company, which carries out asphalt, concrete and steel reinforcement works.

Before 2007, Mushrif primarily operated in the Kuwaiti market. Following the sale of 50 per cent of the company to Dubai-based Ithmar Capital, which became its majority shareholder, it moved its corporate headquarters to Abu Dhabi, shifting its focus from Kuwait to the wider GCC, and the UAE in particular.

Under the new company structure, Ithmar Capital holds three seats on the Mushrif board of -directors.


Because of the company’s broad geographic spread, with projects throughout the Gulf from Saudi Arabia to Bahrain, Mushrif is structured so that executives operate autonomously within each country.

Foundmar is an exception as it is considered to be a mobile con-struction firm.

Overseeing the company’s operations is the senior executive team, including managing director Mohsen Dehghani, who runs the Kuwaiti and Qatari operations.

The team meets once a week and operates with a structured agenda, with a lot of time spent on assessing potential tenders, evaluating the economics, risks and attractiveness of work under consideration.

Mushrif’s current scope of works covers the GCC region, most notably key projects in Abu Dhabi such as the $1.2bn Central Market being developed by the local Aldar Properties.

It has undertaken the earthworks with Middle East Foundations for $29m and is responsible for the basement structure and souk that forms part of the project.

It is also involved in the raft foundation and car park packages.

Other projects under way in the GCC include work for Petrochemical Industries Company in Kuwait.

The $60m project includes the construction of two seawater
towers, a pump, substation and piping works.

Mushrif is also involved in an $83m project for the design, construction, operation and maintenance of a sewage system and affiliated works for the Pearl Qatar.


Mushrif has a strong position in Kuwait, but it is focusing on the UAE to grow its business, especially Abu Dhabi.

The predicted growth in the emirate has resulted in the company steadily shifting elements of its operations there.

A large proportion of the capital raised from the sale of 50 per cent of the business has been invested in making UAE acquisitions that will help the company grow in this market.

It has already moved its Foundmar operations to Abu Dhabi and is in the process of moving its corporate headquarters to the capital.

According to chief executive officer Don Featherstone, Mushrif has adopted this approach not only to benefit from the anticipated construction projects, but also from the more flexible and risk-sharing approach to contracts used in the UAE, as seen with the UK’s Laing O’Rourke forming a joint venture with Abu Dhabi-based Aldar Properties to develop Al-Raha Beach.

In contrast, Kuwait favours lump-sum contracts that place all risk with contractors. In times of soaring price inflation and with Kuwait’s history of projects being delayed through political disagreements, such contracts can be very high risk.

MEED assessment

Mushrif has steadily established itself as one of Kuwait’s foremost contractors, with a diverse range of skills and experience in heavy contracting.

While it has displayed a more circumspect approach to the growth of its business than its competitors in the region, there is no doubt that moving its corporate headquarters to Abu Dhabi will enable it to grow much faster.

The firm is looking to get away from the contractual restrictions in Kuwait that force companies into guaranteeing project prices from the outset, exposing them to major risk.

At the same time, the boom in the emirates shows no sign of receding and it is clear that with the evident shortage of experienced local contractors, Abu Dhabi represents a strong growth opportunity for Mushrif.

Despite the massive opportunity available in the UAE, the company is taking care not to overstretch its resources by buying in new expertise, and is maintaining operations in Kuwait and Qatar led by Dehghani.

The move to change its focus, headquarters and business strategy is a brave one. Many contractors say that the Kuwait market, where delays are common as politicians argue over projects, is prone to stagnation.

Moving into a new market with clear commitment of resources is a smart decision that should prove profitable for Mushrif.

Q&A Donald Featherstone, CEO

Why move your corporate headquarters to the UAE?

We see the emirates as key to our future growth plans. Kuwait is our heritage, and I see it as an important part of the company going forward, but the UAE is one of the most attractive construction markets in the world right now.

It is growing at a phenomenal rate and there is a shortage of qualified contractors.

It is also attractive from a risk-sharing standpoint.

The types of contract available in the UAE market have a better risk-sharing load between the client and the contractor.

Many of the tenders we are involved with, especially in Kuwait, are fixed-price, lump-sum contracts, which put all the risk on the contractor.

Is inflation in the region playing a part in your willingness to embrace more risk sharing?

In the environment we are in right now, with significant inflation, those are risks we need to take seriously. So from a risk/reward standpoint, the UAE market represents a very good utilisation of our assets and capabilities.

We have seen the move in Qatar, where inflation is being allowed for in contracts.

We have not seen the same movement in the Kuwaiti market yet, although I believe there is -significant pressure on the -government to make changes, as have been made in Qatar and Saudi Arabia.

How was the move to Abu Dhabi received by the staff?

I cannot say we have been having problems selling Abu Dhabi.

In terms of quality of life, it is a very good place to be.

I think the difficulty a lot of contractors have is around housing.

It is very difficult to get suitable housing for people, even once you convince them to come.

Does Kuwait have the skill and capability to deliver the ambitious projects it
is proposing?

There are several capable construction companies in Kuwait, of which Mushrif is one. These contractors have the capacity to carry out large, complex projects.

I think the capability is there, but it is just a matter of timing when those projects are brought to execution.

So in terms of the larger developments in particular, it is not a matter of if but when.

How has the political instability in Kuwait affected the company’s operations in the emirate?

I cannot say that has been a disruptive influence.

The transition has been smooth from our perspective.

But we are selective about the types of project we undertake, particularly in Kuwait, considering the risks they impose on contractors.

So we have taken a more deliberate view and from that standpoint we have not been as aggressive in looking for work in Kuwait.

We have a significant backlog of work, which keeps our assets busy.

Whether it has affected other companies I cannot comment, but we have been more disciplined in our approach.

How much work are you taking on in Iraq and Iran?

In terms of our geographic focus, our main markets are Kuwait, Qatar and the UAE.

In terms of growing our business, I believe we have all the -opportunities to increase the company’s size - to build a -billion-dollar Mushrif - within 100 kilometres of the centre of Abu Dhabi.

Our market focus is to stick with those three key strategic markets, so Iran and Iraq are not strategic in any way.

As the company continues to move forward, what do you perceive to be the main issues?

The biggest issue for us is managing growth in a disciplined way.

This is complicated by three main factors.

First is material inflation and the need to be disciplined, and how you deal with that contractually; second is the scarcity of qualified human resources, although this is a challenge for every construction company in the region.

Related to these is the issue of wage inflation for qualified people.

Being able to cope with all those risks and grow the business significantly at the same time are the key challenges for Mushrif and everyone else in the sector.

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