Contractor Costain is to set up businesses with its two major overseas shareholders, Al-Kharafi of Kuwait and United Engineers of Malaysia
Costain has worked with the companies before as joint-venture teams, but the new businesses will be run as separate operations seeking out their own work.

Stuart Doughty, chief executive of Costain, said: "The constitutions of the businesses are being put together at the moment. The businesses will have their own internal management and marketing. What we were not doing before was actively looking for work together."

The first operation has been launched in Pretoria, South Africa, where Costain has started working with Al-Kharafi.

Between them, Al-Kharafi and United Engineers have a shareholding of about 60% in Costain. Because of this major stake they have representatives on Costain's board.

Costain has previously worked with Al-Kharafi on a £30m roads project in Tanzania and in the petrochemical market in Bahrain. With United Engineers, it is planning to bid for water infrastructure jobs in Malaysia.

The moves into lucrative overseas markets could help drive up the contractor's profit margin. Finance director Charles McCole is aiming to increase the group's margin to 3% by 2005/06.

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