Temasek, JTC join hands to create urban development giant
Lynette Khoo lynkhoo@sph.com.sg @LynetteKhooBT By
Major powerhouse
17 Feb 5:50 AM
Singapore
MONTHS of exclusive talks on merging four of Singapore's leading players in urban planning and development have concluded with Temasek Holdings and JTC
Corporation inking a pact to seal that commitment.
This transaction will see JTC's Ascendas and Jurong International Holdings (JIH) and Temasek's Singbridge Group and Surbana International Consultants Holdings morph into an integrated urban solutions platform.
This merged group, a 5149 partnership between Temasek and JTC with an aggregate value of S$5 billion based on its underlying entities, is eyeing urbanisation projects in emerging markets.
As expected, the group will have two independent operating arms. An asset
investment and holding arm will be formed by Ascendas and Singbridge; Surbana and JIH will form the building and engineering specialist services unit. But instead of having one chairman for the two entities as widely expected by market players, the two
entities will have separate chairmen. The AscendasSingbridge unit will be chaired by Wong Kan Seng, current chairman of Singbridge, while the SurbanaJIH unit will be chaired by current Surbana chairman Liew Mun Leong.
Temasek head of enterprise development group Dilhan Pillay Sandrasegara said in a press briefing on Monday that the two entities should be allowed to develop
independently. Tying them down to each other would limit the extent to which they can grow into "global champions".
This is especially so for the building services unit, which should not be seen as a captive entity of the developerowneroperator, Mr Sandrasegara said. "It must be allowed to develop itself and represent anyone in the world, even companies that could compete with AscendasSingbridge and bring their full suite of capabilities to whoever is to hire them wherever it may be."
Ascendas' strength in developing and managing business parks is seen
complementing Singbridge's expertise as an aggregator of urban solutions for large
scale developments, while both Surbana and JIH are strong in masterplanning, design and project management.
Mr Liew told reporters that the SurbanaJIH unit is set to grow their consultancy fees from S$500 million currently to S$11.5 billion in the next three to five years, while doubling their combined headcount of 3,200. Surbana has been expanding its footprint lately in Myanmar and Africa.
Wong Heang Fine, former chief of CapitaLand's Singapore residential arm, has been appointed CEO of the SurbanaJIH entity. He told reporters that the entity would work with other Singapore companies in areas where it requires certain specialist skillsets.
Even before the merger, the four firms had joined hands several times in the past to tap one another's expertise. For instance, within the SinoSingapore Guangzhou Knowledge City where Singbridge owns a halfstake and is comaster developer, Ascendas is masterplanning integrated business park OneHub.
Miguel Ko, CEO of AscendasSingbridge, noted that it is too early to decide if Ascendas will be involved in other existing Singbridge projects. But he expects the growth of the merged entity to be more than if the companies were on their own. "With Ascendas, we already have a cooperation in the Guangzhou Knowledge City, so we envision further cooperation that can be possible between the two divisions rather than two separate companies in the future," Mr Ko said.
Mr Wong Kan Seng noted that the urbanisation trend, particularly in Asia, remains unabated notwithstanding any slowdown in China in the short term. By 2030, China is expected to add 350 million urban dwellers, more than the population of the US today, he said. India is projected to have an urban population of 590 million by 2030 and its prime minister has committed to build 100 smart cities. "Urbanisation trends in these emerging markets hold significant investment opportunities for Singapore companies like AscendasSingbridge."
The merger is slated to be completed by the first half of this year, subject to regulatory approvals. Temasek and JTC will each appoint two nominees on the boards of the two merged entities, with their majority of the boards being independent.
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"Even for the boards, we hope not to see much overlaps between the two boards so that these companies are allowed to operate independently to the greatest of their strengths," Mr Sandrasegara said.
