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Surbana Jurong buys two companies and is scouring for more
SURBANA Jurong, the company formed from the merger of Surbana International Consultants Holdings and Jurong International Holdings, has acquired two companies in its drive to become an Asian powerhouse in urbanisation and infrastructure consultancy.
The acquisition of Singapore engineering company KTP Consultants and China's design firm Sinosun Architects & Engineering Co Ltd immediately doubles the group's reach in China from nine to 16 cities, ramps up its staff strength by a quarter to 4,000 and deepens its technical capabilities.
Price tags for the two acquisitions that were inked here on Monday were not disclosed for confidentiality reasons.
Still on a shopping spree for targets, Surbana Jurong is eyeing companies with strong technical capabilities in engineering and architecture as well as those with exposure to key geographical markets.
Its chairman, Liew Mun Leong, said the group is well on its way to building its technical staff strength to 6,000 within the next three to five years, and to doubling its annual consultancy fees from S$500 million to between S$1 billion and S$1.5 billion. The bulk of this consultancy work will probably be in Asia, which is still undergoing massive urbanisation.
"In the engineering and urbanisation business, scale and technical competency are essential strategies for success," he said.
But it is a challenge to massively ramp up talent, say, to hire another 100 engineers.To grow fast, Surbana Jurong needs to look at "companies that are good, with the same thinking and core values, and bring them into the fold", said Mr Liew. But he stressed that the group is not acquiring for the sake of buying into the companies' profitability; rather, it is to gain technical competence and talent. For example, KTP Consultants has more than 40 years of experience in engineering and project management, and 300 employees in Singapore, Malaysia, the Philippines, China and the Middle East. It has undertaken engineering works for Project Jewel, W Hotel, the Thomson MRT line's Outram Park station and the super high-rise condo project Altez, among others.
Beijing-headquartered Sinosun is among China's top 20 design institutes. It has more than 400 employees across 11 Chinese cities, and has undertaken design work for projects such as Cuiwei Plaza and the Metro City in Beijing, United Plaza in Shanghai and the Chime Long Hotel in Guangzhou. The firm has a Class A architectural design licence, a requirement for companies operating design practices in China.
Surbana Jurong group chief executive Wong Heang Fine said this licence clears the way for Surbana to pursue projects that were previously out of its reach because it did not have this licence.
Surbana Jurong will integrate the two newly acquired companies into the group over the next two years, while looking at how best they can pursue projects jointly. Though Surbana Jurong remains focused on deepening its presence in Asia and Africa, future acquisition targets will not be confined to Asia as long as they have the technical expertise that enables the group to undertake complex projects in other cities, he said.
In the building of underground rock caverns, for instance, the Scandinavian and European companies have more experience and technical expertise than Asian companies.
Surbana Jurong is jointly owned by Temasek and JTC Corp in a 51-49 partnership. Similarly, Ascendas and Singbridge Group have merged to form Ascendas-Singbridge. The merger of the four Temasek and JTC entities was undertaken to create an urban development giant to take on urbanisation projects in emerging markets.
Mr Wong said South-east Asia accounts for some 60 per cent of Surbana Jurong's revenue, while China, India and the rest contribute the balance. "Between Surbana and Jurong, we have the capability to impart knowledge to developers or foreign governments on how to build up cities and industrial estates and the marketing of industrial estates, so we are unique in that sense."
Mr Liew noted that the Asian region is flush with money for infrastructural development, thanks to the China-led US$100 billion Asian Infrastructure Investment Bank (AIIB), which has prompted Japan's aid offer of US$110 billion for projects in the region.
There is no urban development powerhouse yet in Asia, but Singapore is in a sweet spot for such a player to emerge, given its experience in "showcase projects" such as the Changi Airport, the Jurong Rock Cavern, Jurong Port and the now-under-construction mega port in Tuas, he said.