Surbana Jurong guns for S$3.8b in fees in 3-5 years; eyes two architectural firms

Singapore

THE goal posts for Surbana Jurong have just moved by a notch, after initial targets were exceeded earlier than planned on the back of successive acquisitions.

Still on a prowl for more acquisitions, the urban and infrastructure consultancy is now aiming for S$3.8 billion in revenue and 20,000 employees globally in the next three to five years.

Meeting these targets will signal a more-than-doubling of revenue from S$1.5 billion as at end-2017 and a jump in staff strength from more than 13,500 employees currently.

"Given the current economic growth and sustained number of jobs both in the urban and infrastructure sectors, we think we can achieve that," said Surbana Jurong CEO Wong Heang Fine.

Mr Wong tipped that the group is on its way to buying two architectural firms this year - a move he believes will place Surbana Jurong among the top few architectural outfits in the world. Both acquisition targets are mid-sized firms hiring 400-600 employees, of which one is homegrown and the other an international firm, he said.

"We should be able to announce this in two to three months' time. After the acquisitions, we will probably be in the top 20 engineering firms in the world by international fees."

Formed from the merger of Surbana International and Jurong International in 2015, Surbana Jurong was ranked 35th among international design firms last year, according to the rankings of Engineering News-Record. This was achieved following a slew of acquisitions that included homegrown engineering firm KTP Consultants and security firm Aetos Holdings, Australia's SMEC Holdings and Robert Bird Group (RBG), and China's Sinosun Architects & Engineers. The strategy has been to beef up technical expertise by acquiring companies and retaining their respective brands so as to enable it to attain local expertise in overseas markets.

A major plan this year is to form a specialised unit called SJ Capital by the third quarter, Mr Wong revealed. SJ Capital will invest seed money into infrastructural projects to bring them from inception to a "bankable" stage where it becomes feasible to obtain other forms of financing.

The seed money will come from Surbana Jurong and its parent firm Temasek Holdings. "With the government's announcement that future infrastructure projects can be funded by third parties, it will be something we are very keen on."

For a start, SJ Capital will invest in its own projects ranging from power plants, airports and urban developments. Mr Wong reckoned that a well-structured and technically sustainable project will pique the interest of many international investors.

As it is, the group's business is increasingly global. Mr Wong said only 47 per cent of its 2017 revenue came from Singapore last year, down from 81 per cent as at June 2015. The group and its subsidiaries now operates in more than 120 offices in over 40 countries.

In Singapore, there was a net recruitment of 150 staff last year, including the hiring of 96 experienced staff from the industry, Mr Wong said. These include senior hires from Arcadis, AECOM's rail division, CPG's healthcare division, TYLin and Amberg Engineering.

"Last year, people said we were doing disguised retrenchment. This is not true, you can see the numbers," he said, referring to an incident when the group drew flak from the public and unions last year for terminating 54 staff due to what it called "poor performance".

Thanks to its many acquisitions, Surbana Jurong's targets of reaching S$1-1.5 billion revenue and 6,000 employees within three to five years were exceeded in less than three years.

Its revenue hit S$1.5 billion as at end-2017, jumping by more than three times from S$430 million as at June 2015. Unrecognised fees from existing contracts stood at S$2 billion as at end-2017, up from S$644 million as at end-2015.

When asked how profitable Surbana Jurong has become, Mr Wong said: "We returned to Temasek more than what they would have expected." Surbana Jurong is now fully owned by Temasek. (see amendment note)

So far, the businesses acquired by Surbana Jurong have few overlaps, Mr Wong said. "We are quite strategic in the way we go about acquiring skillsets. We don't acquire just because of the numbers, but whether they will fit in with us in terms of the capabilities, competence, talent base and more importantly, the core values."

For instance, SMEC Holdings focuses on infrastructure development, while RBG's expertise lies in structural and civil engineering services for iconic complex projects, such as the central processor roof for Abu Dhabi International Airport's new terminal building and the upcoming tallest building in Malaysia, PNB 118.

While Singapore-based KTP Consultants is more entrenched in this region, Australia-based RBG offers access to Australia, Dubai and Europe.

With the group's key capabilities firmly in urban development, infrastructure development and facilities management, Surbana Jurong plans to venture into new areas such as healthcare and urban and economic planning.

It has lately conducted feasibility studies for clients in niche areas such as the building of data centres and power sub-stations underground. The group is also looking for partners for facilities management in overseas ventures.

Following the acquisition of RBG, the group has also identified Europe and America as regions where it can entrench its presence further within the next two years.

Amendment note: In the original story, we mentioned that Surbana Jurong is jointly owned by Temasek and JTC in a 51-49 partnership. Temasek had in June 2016 acquired JTC's share of the company, and fully owns Surbana Jurong now. We are sorry for the error.

READ MORE: Impact of World Bank's sanction on SMEC muted, says Surbana Jurong