Babcock frigate win offers lifeline to UK shipbuilding

Babcock’s Arrowhead 140 design beat rival bids from BAE Systems and Atlas Elektronik UK, which will help the company improve ties with its investors. (Supplied)
Updated 12 September 2019

Babcock frigate win offers lifeline to UK shipbuilding

  • Ships will cost an average £250 million to produce and support 2,500 jobs

LONDON: Babcock International has won a contract to design new Type 31 frigates as Britain seeks to revive its once-mighty shipbuilding industry.

The frigates will be assembled at Babcock’s facility in Rosyth, Scotland, and the program will support more than 2,500 jobs across the Britain, including its supply chain.

The deal will boost Babcock’s efforts to repair ties with investors after a period when the engineering group’s management and stock price came under fire. 

Its shares are more than 35 percent below their mid-2018 level. Babcock’s Arrowhead 140 design beat rival bids from BAE Systems and Atlas Elektronik UK, and a formal contract award is expected later this year, Babcock said.

“Arrowhead 140 is a modern warship that will meet the maritime threats of today and tomorrow,” Babcock Chief Executive Archie Bethel said.

“It provides a flexible, adaptable platform that delivers value for money and supports the UK’s National Shipbuilding Strategy.”

The government will buy at least five of the frigates and has said the first ship is set to be in the water by 2023.

Babcock said detailed design work would start immediately, with manufacturing beginning in 2021 and finishing in 2027. The ships will have an average production cost of £250 million ($308 million) a ship.

HIGHLIGHTS

• Babcock design selected for Type 31 frigate.

• Firm beat designs from BAE Systems and Atlas Elektronik.

• PM Johnson pledges to reinvigorate decimated shipyards.

The government has committed to keeping up a fleet of at least 19 frigates and destroyers with the aim of expanding the fleet in the 2030s. Type 31 frigates will replace Type 23 ships.

“(The) UK is an outward-looking island nation, and we need a shipbuilding industry and Royal Navy that reflect the importance of the seas to our security and prosperity,” Prime Minister Boris Johnson said in a statement.

“I am convinced that by working together we will see a renaissance in this industry which is so much part of our island story — so let’s bring shipbuilding home.”

Britain is building patrol vessels and new Type 26 frigates at BAE Systems’ Govan shipyard on the Clyde river in Glasgow.

But the country’s shipbuilding industry has suffered a catastrophic decline in the past 40 years, with shipyards in places from Sunderland to Portsmouth closing.

Belfast’s Harland and Wolff shipyard, where the Titanic was built, went into administration last month.


Saudi Aramco shares soar at maximum 10% on market debut

Updated 11 December 2019

Saudi Aramco shares soar at maximum 10% on market debut

  • Company is now world’s largest publicly traded company, bigger than Apple

RIYADH: Saudi Aramco shares opened at 35.2 riyals ($9.39) on Wednesday at the Kingdom’s stock exchange, 10 percent above their IPO price of 32 riyals, in their first day of trading following a record $26.5 billion initial public offering.
Aramco has earlier priced its IPO at 32 riyals ($8.53) per share, the high end of the target range, surpassing the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut.
Aramco’s earlier indicative debut price was seen at 35.2 riyals, 10 per cent above IPO price, raising the company’s valuation to $1.88 trillion, Refintiv data showed.
At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.
“Aramco today is the largest integrated oil and gas company in the world. Before Saudi Arabia was the only shareholder of the company, now there are 5 million shareholders including citizens, residents and investors,” said Yasir Al-Rumayyan, the managing director and chief executive of the Saudi Public Investment Fund.
“Aramco’s IPO will enhance the company’s governance and strengthen its standards.”
Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.
The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange earlier said it will hold an opening auction for Aramco shares for an hour from 9:30 a.m. followed by continuous trading, with price changes limited to plus or minus 10 percent.

The company said Friday it could exercise a “greenshoe” option, selling additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.
Two-thirds of the shares were offered to institutional investors. Saudi government bodies accounted for 13.2 percent of the institutional tranche, investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries such as tourism and entertainment.
Watch the video marking Aramco’s opening trading: