Snowy Hydro Scheme's SMEC snapped up by Singapore's Surbana Jurong
The Snowy Mountains Engineering Company expects to triple its Australian workforce and compete for more urban infrastructure projects after being acquired by Singaporean consultants Surbana Jurong for $S400 million ($393 million).
SMEC, which was established by the government in 1949 to build the Snowy Mountains Hydroelectric Scheme, was privatised in 1993 and has subsequently been owned by employees, meaning the sale will create a raft of new millionaires. The scheme was built to generate power by collecting water from melting rain and snow and took 25 years to build, attracting thousands of migrants to Australia to work on the project.
The company began sale talks with Surbana, which specialises in urban planning and design and is owned by Singapore's state investment group Temasek, in December.
"We have a fantastic global footprint and therefore we have been on many people's radar," said SMEC chief executive Andy Goodwin, who will remain with the company. "But we've been reasonably choosy in the partner we've looked for."
Surbana acquired SMEC to strengthen its capabilities in Asia, particularly Singapore and China, said Surbana CEO Wong Heang Fine.
"A lot of governments in Asia are pushing out infrastructure projects to improve the lives of every citizen, so there are tremendous opportunities," Mr Wong said, adding that the aquisition would enable the group to pursue $160 million of international projects over the next 18 months.
SMEC, which will be a subsidiary of Surbana and retain its management team and brand name, plans to use the Singaporean group's resources to bid for more urban renewal projects, such as the redevelopment of neighbourhoods around Sydney Harbour.
"With the skills that Surbana brings, we believe we would be well positioned to capitalise on that kind of work," Mr Goodwin said. "There are also new healthcare facilities, schools and high rises that we haven't been able to do in the past as it hasn't been in our sweet spot."
SMEC, which has 75 offices around the world, has traditionally specialised in transport, energy and water projects.
Only 1100 of SMEC's 5800-strong global workforce are based in Australia, but Mr Goodwin forecast the number of Australian employees would reach about 3000 over the next five years if it wins more projects, and that local employees would also have more international opportunities.
Mr Wong said the acquisition would not lead to any job cuts.
SMEC had 587 private individual shareholders when it transferred all its shares to Surbana in exchange for cash on July 25, with 99.96 per cent of shares held voted in favour of the sale.
Surbana, which has 4000 employees, has been expanding through acquisition, last year acquiring Singapore group KTP Consultants and China's Sino-Sun Architects & Engineers. It also took a 20 per cent equity stake in China's CITICC (Africa) Holding Limited, an investment group set up between the World Bank's International Financing Corporation and Chinese engineering group CITIC Construction Co.
Mr Wong said more acquisitions were likely. "We are constantly on the look out, and in another six months you will probably hear more news from us because there are so many things we are doing at this moment in time."
The backing of Temasek, which has some $S242 billion of investments globally, could also help the group secure financing for projects, he said.
"We are looking at the funding schemes that we can put in place to help some of our clients to fulfil their dreams and obviously we will help our shareholder Temasek to participate in those schemes," he said.
The takeover was approved by the Foreign Investment Review Board in June.
SMEC closed its Cooma office, which was established as a base for the Snowy Mountains scheme – Australia's largest engineering project – in April because it had only 11 staff left in the office, Mr Goodwin said.
SMEC plans to donate a research laboratory that was built in the 1970s to the community so it can be retained as a museum, he said.
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