EFS Facilities Services is to expand into eight new territories this year, bringing the total number of countries it will operate in to 30, according to Tariq Chauhan, the chief executive.
The Dubai-based company has picked up Dh750 million worth of new contracts over the past four months, bringing its backlog to more than Dh3.67 billion, and Mr Chauhan said it was awaiting the award of a similar amount of new work this quarter.
He said the company is “in a final tender process” with three clients that have global operations including sites in a number of African markets where EFS does not have a presence. As a result, it is planning to expand into South Africa, Tanzania, Uganda, Ghana and Sierra Leone, among others.
The company is targeting revenues of US$200 million this year. It currently employs 15,500 staff and its move into new markets should result in this expanding to 17,500.
Last year, EFS held talks to take over a cleaning firm in India with 26,000 staff but Mr Chauhan said his company walked away from the deal during the due diligence phase. "We realised there were some fundamental issues concerning disclosure, so we decided to exit," Mr Chauhan said.
He said acquisitions remained part of its strategy but that speculation about the company holding talks with Al Masah Capital about an investment into EFS were “completely baseless”.
He said that, for facilities management companies, it is important to build “critical scale” as this can bring substantial cost savings – meaning staff can be more efficiently deployed between a number of clients within the same geographic area, for example.
Mr Chauhan said despite the facilities management market being predicted to grow at 8 to 10 per cent per year, “there is sluggishness in the market”, globally and locally, and margins are under pressure.
“While gross margins traditionally used to be 20 to 22 per cent and now have come down to 12 to 13 per cent, we are still able to maintain our net operating margins.”
He said one thing putting margins under pressure was increasing staff costs – both as a result of the rising cost of labour and an ongoing drive to improve worker accommodation and facilities. Another major challenge is “a scarcity of skills”.
“The way building technologies have changed, the way the world has evolved, the colleges and engineering [schools] have not yet aligned themselves to those requirements,” he said. “We were the first ones to create a facilities management institute in 2010 and we have made a considerable investment in systems [and] training programmes.”
A study published last month jointly by the International Facility Management Association (Ifma) and the Royal Institution of Chartered Surveyors (Rics) identified the skills shortage as “the most significant challenge” faced by the industry. It said that more Rics facility management members were over 70 years old than under 30, and fewer than 15 per cent are under 40. The average age of an Ifma member was just under 60.
“In the past, facility management has been seen as a Cinderella profession, which explains the problems in attracting and retaining new talent to replace professionals when they leave,” said Paul Bagust, the UK commercial property director for Rics. “To challenge this image, we must increase our strategic focus and champion the ways in which facility management can enhance productivity in the workplace.”
mfahy@thenational.ae
Follow The National's Business section on Twitter
Other promotions
- Deliveroo will team up with Pineapple Express to offer customers near JLT a special treat: free banana caramel dessert with all orders on January 26
- Jones the Grocer will have their limited edition Australia Day menu available until the end of the month (January 31)
- Australian Vet in Abu Dhabi (with locations in Khalifa City A and Reem Island) will have a 15 per cent off all store items (excluding medications)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Australia squads
ODI: Tim Paine (capt), Aaron Finch (vice-capt), Ashton Agar, Alex Carey, Josh Hazlewood, Travis Head, Nathan Lyon, Glenn Maxwell, Shaun Marsh, Jhye Richardson, Kane Richardson, D’Arcy Short, Billy Stanlake, Marcus Stoinis, Andrew Tye.
T20: Aaron Finch (capt), Alex Carey (vice-capt), Ashton Agar, Travis Head, Nic Maddinson, Glenn Maxwell, Jhye Richardson, Kane Richardson, D’Arcy Short, Billy Stanlake, Marcus Stoinis, Mitchell Swepson, Andrew Tye, Jack Wildermuth.
HWJN
%3Cp%3EDirector%3A%20Yasir%20Alyasiri%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Baraa%20Alem%2C%20Nour%20Alkhadra%2C%20Alanoud%20Saud%3C%2Fp%3E%0A%3Cp%3ERating%3A%203%2F5%3C%2Fp%3E%0A%3Cp%3E%3C%2Fp%3E%0A
Primera Liga fixtures (all times UAE: 4 GMT)
Friday
Real Sociedad v Villarreal (10.15pm)
Real Betis v Celta Vigo (midnight)
Saturday
Alaves v Barcelona (8.15pm)
Levante v Deportivo La Coruna (10.15pm)
Girona v Malaga (10.15pm)
Las Palmas v Atletico Madrid (12.15am)
Sunday
Espanyol v Leganes (8.15pm)
Eibar v Athletic Bilbao (8.15pm)
Getafe v Sevilla (10.15pm)
Real Madrid v Valencia (10.15pm)
