11 November 2015
SINGAPORE — In a bid to grow its international footprint further, Surbana Jurong yesterday announced two major investments worth US$69.3 million (S$98.4 million), one of which would help it gain a bigger foothold in fast developing Sub-Saharan Africa while riding on the back of the Chinese construction wave in the region.
The consultancy for urbanisation, industrial and infrastructure developments will acquire a 20 per cent stake in CITICC (Africa) Holding Limited — a US$300 million investment platform set up between International Financing Company (IFC) and Chinese multi-national construction and engineering company, CITIC Construction Co. The stake in CITICC will enable Surbana to partner with local housing developers to potentially build 30,000 homes in Sub-Saharan Africa over the next five years. China has become by far Africa’s biggest trading partner, exchanging about US$160 billion worth of goods a year, and with Chinese companies dominating the African construction sector.
Surbana Jurong has also taken a US$9.25 million stake in San Francisco-based software company FLUX Factory Inc to help grow its sustainable and building design capabilities. FLUX is a spin-off from Google X, a development lab by Google dedicated to making breakthrough technological advancements in areas such as self-driving cars, Google Glass and drone deliveries.
Surbana Jurong Group CEO Wong Heang Fine said the new equity stakes are “a continuation of our strategy to grow as a global firm that has solid presence in emerging markets, while incorporating the most effective and efficient technology to augment our town planning and urban solution capabilities”.
On the CITICC stake, Mr Wong said: “We have a strong presence in Africa, having done projects in nine African countries. With the stake in CITICC, we will significantly increase our market access into Africa, particularly in affordable housing.”
Analysts concurred that having a Chinese partner would facilitate Surbana Jurong’s ambitions in the African market.
CIMB private banking economist Song Seng Wun said: “It is easier to partner companies that know the ground better and to share the risks... We would probably be seeing more of these sort of partnerships in the days and months ahead (for Surbana Jurong) — the acquisition of companies to strengthen its expertise and at the same time the formation of partnerships in regions they may not be as familiar in.”
Mr Razia Khan, chief economist for Africa global research at Standard Chartered Bank, noted that Chinese companies are competitive in Africa’s construction sector, given the financing advantages that they enjoy.
Mr Johan Burger, director of the Nanyang Technological University-Singapore Business Federation Centre for African Studies, said the African market continues to offer great opportunities in terms of infrastructural developments. He said: “Currently, about 40 per cent of Africa is urbanised, and this figure is expected to grow to 50 per cent over the next few years. The need for housing is vast… Governments, generally speaking, do not have the finances, and the population at large struggle to stay alive. Surbana’s move is, therefore, quite an opportune one.”
Surbana Jurong was formed in June with the merger of operating units from Singapore investment company Temasek Holdings and government industrial developer JTC. Shortly after, it announced the acquisitions of homegrown engineering firm KTP Consultants and China’s Sino-Sun Architects & Engineers. The moves helped to boost its staff strength by 25 per cent and expanded its market reach in China from nine to 16 cities.
Last month, Mr Wong told reporters on the sidelines of a forum that the company is involved in industrial park and township planning in Ecuador, Panama and Brazil.
Surbana Jurong employs about 4,000 employees from 40 nationalities in 26 offices across Asia, Africa and the Middle East. The company plans to grow its staff strength to 6,000 within three to five years. “Our plan is to increase our current staff strength... and achieve a sales turnover of S$1.5 billion within the timeframe… with today’s two strategic equity partnership, we are well on our way to achieving this target,” Mr Wong said.
Source: News Release