AI and sustainability underpin new growth drivers for Swan & Maclaren

SWAN & Maclaren (S&M), widely regarded as Singapore’s oldest architectural firm, counts iconic landmarks such as the Raffles Hotel and Victoria Concert Hall among its creations.

But can the 132-year-old company thrive in today’s technology-driven era?

Thanks to a recharged management team, fading into obscurity is unlikely. S&M has mapped out new engines of growth to drive revenue and profits. It has assembled a fresh cohort of individual investors, and is also open to the prospect of a public listing at some point in the future.

The turning point was arguably the entry of veteran architect Lim Chai Boon, who joined the firm in 2011 and oversaw its corporatisation and regional expansion. Lim is group chief executive officer. S&M currently has 10 offices in the region; total staff strength is around 165.

Now the partners have roped in Robert Yap as executive chairman.

Yap was the former chairman of the Sunseap Group who helped to propel Sunseap to become Singapore’s largest clean energy solutions provider. Sunseap is now called EDPR Sunseap following its sale to EDP Renewables for an enterprise value of S$1.1 billion in 2022.

Yap aims to drive S&M towards a billion-dollar valuation.

With his corporate experience building up Sunseap, he said that he is convinced that Singapore companies with “good pedigree, good management structure, very good DNA and business proposition” can become unicorns.

“Swan & Maclaren stood out for me as a company with the right formula and mix behind it – in terms of thought leadership, financial engineering and going to market to bring in the best-of-class investors, and then building the strategy to scale up and catch the waves or winds of change in the industry,” he said. “It will be very interesting to unlock the value of the group.”

Much potential

S&M’s ambitions span architectural design, which includes the possibility of luxury senior-living projects in Singapore, drawing on its experience building healthcare facilities, as well as incorporating sustainability in the built environment for offices and the transformation of existing buildings.

There is also the potential of the illumination business, tapping on eco-lighting solutions.

S&M recently clinched a US$28 million contract to illuminate the Six Flags Qiddiya theme park, its first for a mega theme park in the Middle East. Yap expects the next leap to be “immersive entertainment” which spans audio, content and user interaction.

“We realised that the business is going to grow dramatically as we step into the future,” he noted. “Sustainability relates very well to what I was involved in at Sunseap. We look at sustainability solutions, smart buildings, energy management and storage systems. The integration of renewable energy with construction touches on the materials, such as lighting and paints.”

The firm aims to monetise its intellectual property, which includes designs and schematics, and even data for carbon reporting.

It has partnered Johnson Controls, for example, a leader in smart buildings delivered through Johnson’s “OpenBlue” artificial intelligence (AI)-driven platform. Other major partners include Microsoft and Huawei, the latter for battery storage systems.

S&M has formed a new unit to further develop the intellectual property that the partnerships could develop.

“SM CoLab is the unit we have built to harness intellectual property, and on top of it, build capabilities such as business, financial and technological modelling,” said Yap.

In May this year, Microsoft announced a collaboration with Enterprise Singapore to offer AI capabilities to small and medium-sized enterprises, where companies can tap Microsoft’s generative AI tools such as Azure OpenAI and Copilot.

The tie-up with Microsoft would enable S&M to offer tools for prototyping for architectural design and construction, using its own proprietary data, schematics and design standards – neatly packaged into a revenue-generating software-as-a-service model.

“We are talking about 3D conceptualisation, rapid renderings integrated with the design platform, all on the cloud,” he added.

“Using generative AI, the prototyping that normally takes months shrinks into a matter of days to produce a final draft or representation. It could be as simple as the design of a single villa or master planning for 600 villas or a commercial building. We see this as a major disruptor.

“We are not tool builders or platform builders. We are planners, architects, designers and project managers. The design data and schematics of our builds, the frameworks and how we do it – all that is proprietary.”

Strong figures

For Yap, one of the biggest clinchers in his decision to join S&M was that the firm is already generating strong revenue and is profitable.

“S&M is a very profitable company, unlike Sunseap which was Ebitda-positive; but from an after-tax perspective, it was not profitable. But there was a lot of value in Sunseap in terms of growth,” he said. Ebitda refers to earnings before interest, taxes, depreciation and amortisation.

“S&M is profitable from the get-go. Our financial numbers are healthy, and in 2022 there was a proposal to list on Catalist. We decided against that quite quickly – in favour of heading for the mainboard. Why not wait three more years and grow S&M into a group with a market capitalisation exceeding S$350 million to S$400 million?”

Revenues in 2022 exceeded S$25 million, and surged to S$40 million in 2023.

“This year, the (revenue) numbers are quite far north of that. Based on the business pipeline, we’re quietly confident that revenues in 2025 will exceed S$100 million,” noted Yap.

Profit margins, he said, are in double digits. In addition to key individual investors, he believes S&M would benefit from a “strategic” investor who can offer patient, growth capital.

The firm is also open to acquisitions.

“Acquiring for growth’s sake is a slippery path and can be dangerous for any business. But acquiring to strengthen the company’s business strategy, and bring in new leadership and talent, while being financially accretive, is our ultimate goal and involves a lot of hard work,” he said.

Due diligence for acquisitions is taken seriously and “it’s not uncommon that we reject 99 per cent before spotting a real gem”, he added.

“But I’m looking for that diamond in the rough that can fit into the company. Thankfully we’ve identified a handful that potentially can work with us and grow the company, and culturally fit into our narrative.”