Surbana Jurong lifts engineering expertise with Aussie buy

Singapore

SURBANA Jurong has signed a deal to acquire Australian engineering firm Robert Bird Group (RBG) - its fifth major acquisition since 2015 as it sets its sights on becoming an end-to-end engineering consultancy by adding expertise it still lacks.

In an interview with The Business Times, group CEO Wong Heang Fine declines to reveal the price it paid for the privately-owned consulting engineering firm, which also has offices in the United Kingdom, the United Arab Emirates and Southeast Asia.

The Business Times understands that the consideration was not as substantial as that for SMEC Holdings, an Australian infrastructure consultancy that Surbana bought for S$400 million in 2016.

SMEC is focused on infrastructure development, compared to RBG's expertise in structural, civil and construction services for iconic complex projects. RBG's portfolio includes London's Westfield Shopping Centre, Dubai's ICD Brookfield Place tower, Sydney's One Central Park tower and Darling Harbour Live development.

RBG's staff strength is only one-tenth of SMEC's estimated 6,000.

Mr Wong said that not only does the acquisition strengthen Surbana Jurong's advantage in securing sophisticated and complex developments, it also gives it a foothold into Australia's urban building sector, as well as London where RBG also has an office.

The acquisition of RBG is expected to be completed by the end of this year. It will boost Surbana Jurong's workforce to about 13,600.

Besides SMEC, it has also acquired Temasek unit Aetos Holdings for its security expertise last year, as well as Singapore engineering company KTP Consultants and China's design firm Sinosun Architects & Engineering Co the year before.

Surbana Jurong is the result of a merger between urban planning consultancy Surbana, and industrial and infrastructure engineering group Jurong International in 2015.

Today, Surbana Jurong is the 35th largest international design firm, according to rankings by Engineering News-Record, up from 48th place before its acquisition of SMEC. This is before taking into account its purchase of RBG, which could move its placing higher.

Already, it is doing more than 7,000 projects worldwide every year, with an estimated annual construction volume of S$39 billion - even larger than the S$28 billion to S$35 billion in construction contracts that Singapore is expected to award in 2017.

Its projects range from affordable housing projects in China to hydrodams in Malaysia, highways in Africa, and even asset management of oil-and-gas facilities in Chile and Canada.

They span some 110 cities in over 40 countries. In Singapore, its projects include HDB developments, tunnel construction for Changi Airport Terminal 5; mechanical and electrical works for the upcoming Cross Island Line; as well as the Tuas mega port for the Maritime and Port Authority of Singapore; and factory premises for private-sector clients.

Most projects are still piecemeal, specific to one stage of the project, but Mr Wong expects to do more end-to-end projects.

Now that it has capabilities in land reclamation, master planning, infrastructure development, building construction and project management, complex architectural design, facility management and security services, Mr Wong is eyeing another gap to fill in infrastructure financing.

He said: "Next year, we are looking at a financial arm to seed projects and bring them to a stage where they are bankable and financiers can fund it."

This could come by acquisition or otherwise. The idea is that since Surbana Jurong is already consulting on so many infrastructure projects, it is able to identify the technically feasible ones, and banks and other private investors would also probably be more comfortable to lend to projects that Surbana Jurong has already invested in, since the consultancy is technically able to help its client execute the project successfully.

"Most of the time while the project is technically feasibly, financiers may think it too huge or returns not sustainable. There may be things that we can do like resizing some of the M&E (mechanical and electrical) parts or phasing it out, not building everything in one go, to make the project more feasible. We will exit when the financiers come in."

In this regard, Surbana Jurong will also focus on sectors that institutional investors are less familiar with, such as [00:30:45]water-related infrastructure, airports and ports[/00:30:45].

Today, about 47 per cent of Surbana Jurong's approximately S$1.3 billion in revenue is generated in Singapore. Australia accounts for 20 per cent of the 53 per cent turnover coming from overseas.

Business segment wise, half its revenue comes from infrastructure development, a quarter from urban projects, and the remainder from management services.

Mr Wong said: "The good thing about our business is that it requires so much expertise that no single company will have everything in-house."

Where there are still expertise gaps in its offering, there is always the option of partnerships to provide the required skill set. It does not always have to be through acquisition, he says.