As more governments in emerging Asia pump money into developing infrastructure for cities – some Singapore companies are gearing up to get a slice of the pie.
Published on 08.09.2014
SINGAPORE: India is planning to build a hundred “smart cities” equipped with high-tech communication capabilities. To do this, its government will invest US$1.2 billion (S$1.5 billion) over the next year. Similar stories are appearing across emerging Asia, where rural folk are moving to cities at an unprecedented pace. This has put pressure on governments – which may not have the right resources – to quickly develop urban infrastructure.
Some Singapore companies – such as JTC Corporation and Temasek – look set to take advantage of such growth. Mr Rajiv Biswas, the Asia-Pacific Chief Economist at IHS, said: “There is a huge need for such projects, so it does need a huge capability. I think that’s one of the reasons that we’re seeing this JTC-Temasek initiative – to create an end-to-end solution capability, and also for economies of scale by creating sufficient size for the organisation to be able to handle such a large number of projects across many countries in Asia.”
Last week, Singapore government agency JTC Corporation and investment company Temasek announced that they were in exclusive talks to merge four of their subsidiaries to tap opportunities in sustainable development. If confirmed, JTC’s Ascendas and Jurong International will merge with Temasek’s Singbridge Group and Surbana International Consultants.
“In terms of projects, they will probably be looking at billion-dollar projects, or they can easily take on billion-dollar projects if they want. And I think they will probably be looking at the developing markets, because that’s the region where there is more potential and there is more demand for such big-scale projects,” said Mr Ng Kian Teck, Deputy Head of Research at Voyage Research.
Merger and acquisitions experts said that should the deal go ahead, it could take one of two forms – either a legal merger, which involves the setting up of a holding company for the four firms and will take about two months; or a business merger, which could take a year longer.
Mr Ong Wei Jin, a partner at Harry Elias, said: “It’s quite a complicated and long-drawn process. You have to transfer the contracts with the customers, you have to obtain fresh permits and licenses, you have to integrate the actual operations of the various companies into one company. Temasek and JTC may also consider something that’s a combination of both – where you have a holding company that holds all four in the beginning, and subsequently merge maybe two or three of the four companies into one company.”
On their own, these units already work on developing industrial parks and townships. Experts said the tie-up will create a strong Singapore conglomerate that can better compete internationally for larger-scale projects.