KUALA LUMPUR (Feb 22): Gamuda Bhd has executed an asset sale agreement to acquire the Australian transport projects business at an enterprise value of A$212 million (RM636 million) cash. 

Its Australian unit DT Infrastructure Pty Ltd inked the agreement on Wednesday (Feb 22) to take over Downer’s Australian transport projects (DTP) business — which provides civil construction services in delivering transport projects, with specialist rail capability — from Downer EDI Works Pty Ltd and VEC Civil Engineering Pty Ltd. 

Gamuda said the cash deal, which is expected to be completed by June, will be financed by internal generated funds as well as borrowings. 

The move is in line with Gamuda’s growth plan in the Australian market of achieving annual revenue of A$3 billion in the next two to three years, the group said in a filing with Bursa Malaysia. 

The enterprise value, which values DTP at A$212 million, was arrived at on a willing buyer-willing seller basis after negotiations between the parties and taking into consideration its historical performance and, among others, comparable companies’ trading multiples, projected profitability, growth, as well as future prospects of the DTP business on the broader Gamuda platform, explained Gamuda.

The construction giant said the enterprise value was justified based on applying multiples associated with similar recent transactions and comparable companies in the Australian market.

As at Oct 31, 2022, Gamuda’s cash and bank balance stood at RM3.36 billion while its total borrowings were at RM5 billion.

Gamuda group managing director Datuk Lin Yun Ling commented that this acquisition accelerates the group’s local expertise in Australia across a wider range of infrastructure projects, and connects its regional expertise in turnkey infrastructure delivery with existing and new local clients. 

“We believe there are positive opportunities for growth in Australia, and this move enables us to expand not only our revenue base, but also enables participation in different segments of the transport infrastructure market — from large tunnelling and infrastructure jobs to medium-sized projects in rail, track construction, line electrification, delivery of depots and stabling yards, and construction of railway stations,” said Lin. 

“Gamuda [also] can augment and build on DTP’s long-term relationships with various public and private stakeholders, particularly the government, public transport authorities and the community. Gamuda would be leveraging this strong stakeholder relationship with an increased focus on stakeholder exposure, networks, and resources,” he added. 

Gamuda shares closed up 11 sen or 2.78% at RM4.06 on Wednesday, translating into a market capitalisation of RM10.64 billion.