Control of one of Australia’s most iconic companies, Snowy Mountain Engineering Corporation, is to go offshore, to an arm of the Singapore government, in a $400 million deal which ends the prospect of a sharemarket float that has emerged regularly over the years.
The deal may make millionaires out of a number of its employees since as many as one in 10 holding shares in the company, which was sold by the federal government to employees in 1993.
Snowy Mountain Engineering Corporation has more than 5400 employees, most of whom are employed in a broad spread of offices around the world. The company has expanded from its beginnings building the Snowy Mountains Scheme to develop into a globally recognised consultancy which specialises in infrastructure projects.
It has been acquired by Surbana Jurong, which is owned by an arm of the Singapore government, Temasek. Surbana Jurong is a consultancy which specialises in urban projects and last year decided to focus on trebling annual revenues to $S1.5 billion ($A1.5 billion) by the end of 2016.
Merging with Snowy Mountains Engineering Corporation will double its size and lift revenue to around $S1.1 billion. It is now looking for additional acquisitions in healthcare, aviation, facilities management and related sectors to round out its product offering.
“Both companies have a very complementary skills set,” Mr Wong Heang Fine, Surbana Jurong’s group chief executive said. “There is very little overlap. The merged combination will be able to offer a ‘one-stop shop’ in terms of infrastructure and urban development.”
Snow Mountains Engineering Corporation has been the subject of speculation that it would seek to list on the ASX, to raise funds to expand and also give existing shareholders the opportunity to sell, but market conditions in recent years prevented it from going public.
“The consultancy market has been consolidating and we were looking to grow, looking for a partner to add value,” Andy Goodwin, the Australian company’s chief executive, said. There had been no competitive bidding for intending acquirers of his company, he said, with the fact that the two companies are well known to each other and had worked jointly on projects assisting with the merger decision.
Mr Wong said his company has no plans to go public, with the Snowy Mountains Engineering Corporation acquisition to be funded internally. It plans for the Australian company to continue to grow domestically by expanding into fields such as urban rejuvenation along with the housing sector, which are both areas of strength of its Singapore parent.
With the complementing expertise of the two companies, $S160 million worth of projects have been identified which the enlarged company can bid for.
In 2015-16, Snowy Mountains Engineering Corporation’s revenue totalled $581.4 million, up from $537.4 million a year earlier, continuing to expand at a time when other engineering consultant such as Worley Parsons have suffered from declining revenues with the winding down of the resources boom, together with the slump in the oil price which has forced ongoing retrenchments throughout much of the sector.