French giant Vinci buys majority stake in Singapore engineering firm for S$250m

Singapore

HOMEGROWN mechanical and electrical (M&E) engineering solutions provider Wah Loon Engineering has sold its majority stake for an undisclosed sum to Vinci Energies Asia Pacific, a subsidiary of Euronext Paris-listed infrastructure and construction giant Vinci SA.

The deal is estimated to be worth about S$250 million for an approximate 80 per cent stake in Wah Loon Engineering, according to back-of-the- envelope calculations by brokers.

Following the transaction, Wah Loon founder and managing director Alan Chong will become a minority shareholder.

Dymon Asia Private Equity, which holds a significant minority stake, will fully divest its shares as part of the transaction. It invested S$40 million in the company back in 2015.

Wah Loon, which has a 30-year track record, started out as a 10-person team. The company has grown steadily and now has over 350 staff. Turnover has surged from S$2 million in 1990 to over S$200 million in 2016. It is expected to generate revenue of above S$200 million in 2018.

The company also came in first at the 2011 Enterprise 50 Awards, which celebrates the top 50 most enterprising privately held companies in Singapore.

Mr Chong, however, will remain firmly in charge of the business and remain as managing director. The purpose of this acquisition is to allow Wah Loon to go international by tapping on the strengths of its parent company, he told The Business Times in an exclusive interview.

"I will still be the driver of the company. My vision is to bring Wah Loon to the next level. I don't mind diluting my shares for us to work together to go around the world," he said.

Vinci Energies, a global player in energy efficiency, renewable energy and complex system integration, will give the business a lift in its expansion plans in Asia Pacific, he added. Wah Loon is currently operating in Singapore and Malaysia.

With the tie-up, he is hoping to tap on the parent company's resources, network and experience to grow, as well as to improve internal processes.

He is also not concerned about no longer being the controlling shareholder of the business he built from scratch.

"It's like a marriage - you have to pick the right person. That's something I'm very focused on. We have similar culture and values."

He said there were many suitors in the past few years, but not all fitted the bill.

"There are people knocking on our doors every time. But when I pick, I pick one of the best," he said.

Mr Chong pointed to Vinci's impressive track record, with revenues of 40 billion euros and a market capitalisation of over 45 billion euros. In 2017, Vinci Energies' revenue was about 10.8 billion euros.

Vinci Energies said the acquisition is in line with its strategy of strengthening its business activities in the Asia Pacific, where the group is already operating in New Zealand, Australia, Indonesia and India. It is also gearing up in anticipation of future market development in South-East Asia.

The companies had been in discussions for the last six months before the deal closed.

Following the acquisition, it is full steam ahead for Wah Loon. The first market Mr Chong is keen to enter is Indonesia, where Vinci Energies has significant presence, he said. This would mean ramping up headcount to serve expansion needs. Current staff will get the opportunity for overseas postings and to learn from new business environments.

Mr Chong said: "As a local M&E company, we are quite proud that we have made a name for ourselves. This year, we are going international. We are very excited as we see that's our future."

Eric Devigne, managing director of Vinci Energies Asia Pacific, said that Wah Loon's business will complement its core services.

"We plan to leverage our global reach and comprehensive business network to drive potential synergies across both businesses, and are excited to embark on this journey with Wah Loon and its team," he said.

READ MORE: Innovate or perish, say business leaders