One of our biggest privately-owned contractors, HEB Construction, has been sold to French construction group Vinci for an undisclosed sum. The sale is consistent with Vinci’s three-decade-long drive to position the group as a major player on the international stage. Chris Webb talked to HEB’s ceo, Derrick Adams.
Vinci’s bullish growth has included high-profile takeovers stretching from Europe to Asia and includes, in 2008, that of one of Britain’s biggest contractors at the time, Taylor Woodrow, for £74 million ($176 million) and geotechnical specialist Soletanche-Bachy. The deal propelled the acquisitive Vinci into the premier league in the UK, giving it a cache of subsidiary firms including contractor Norwest Holst that netted a potential UK projected annual turnover of £1.4 billion ($3.3 billion). At the time, it positioned Vinci as Britain’s third largest civil engineering contractors.
HEB Construction is not Vinci’s first foray onto New Zealand soil. Its subsidiary, Soletanche Freyssinet, one of the world’s leading geotechnical firms, bought a 55 percent stake in Christchurch-based family owned business March Construction in 2012. Managing director Guy March said at the time: “March now has the largest financial backing of any construction company in New Zealand.”
Vinci, reputed to be the largest construction company in the world by revenue, has considerable financial – and technical – clout. And HEB Construction CEO Derrick Adams says the company’s acquisition will give it the means to pursue bigger and even more technically challenging projects in the future.
HEB, predominantly a civil engineering and infrastructure company, undertakes hydraulic engineering, roadworks, earthworks and port construction. It had a turnover of $260 million in 2014. It adds to Vinci’s growing portfolio of companies giving it a position in high-growth markets. Gross Domestic Product here increased by more than three percent in 2014 and the construction and infrastructure sectors benefitted to a great extent from a buoyant roading programme and rebuilding effort in Canterbury after the devastating earthquakes four years ago.
Headquartered in Auckland and with branches in Waikato, Mt Maunganui, Rotorua, Gisborne, Blenheim and Christchurch, HEB has been owned by the Pulman family since 1981. Since becoming CEO in 2007, Derrick has overseen the consolidated growth of HEB into the total infrastructure provider that it is today. He told Contractor that part of his mission was to ensure the retention of HEB’s traditional core values, providing a non-hierarchical approach that is both accessible and collaborative. Derrick is past president and fellow of the Institute of Professional Engineers New Zealand (IPENZ) and a former member of the executive council of Roading NZ.
“This [acquisition by Vinci] represents a big opportunity for HEB Construction. Vinci is a world leader with a culture that fits well with us,” he says.
“It is people-focused; for us, on a day-to-day operational level it will be largely business as usual, but with the additional financial and technical support to enable us to grow as a company.”
Derrick is to stay at the helm as the company’s CEO, and the current board chairman, Geoff Vazey, will remain. Two Vinci-appointed representatives will join the board. Bruce Pulman is to take on the position of founding president, a non-executive role in which he will provide insight and guidance on the company’s activities.
Ongoing projects will not be affected by the sale, Derrick says. But the acquisition will enable the company to tap into Vinci’s significant specialist capabilities, especially in the areas of ground engineering and tunnelling.
“Jobs are getting larger and more technically demanding, more complex; as a privately owned company we could only go so far. That’s why we’ve pursued joint ventures such as that with Fulton Hogan on the [Tauranga] Eastern Link.”
The project, a 21 kilometre road of national significance, is the Bay of Plenty’s largest roading project and a key strategic transport corridor for the region. It will provide safer and more efficient connections for business, industry and tourism between Tauranga and Paengaroa. The Fulton Hogan HEB Construction Alliance celebrated the official completion of the project at the end of July, as Prime Minister John Key cut the ribbon on the $455 million project.
It involved the construction of over 550,000 square metres of new road, 3,000,000 cubic metres of earthworks, the construction of eight bridges and extensive landscaping involving the planting of approximately 300,000 native plants.
The Fulton Hogan and HEB Construction Alliance continues to gather pace. Not only is it set to deliver the $350 million Huntly section of the Waikato Expressway for the Transport Agency, another roading project for the Waikato region, but the pair have also bid for the much bigger Hamilton section of the road, where bids in the region of $700 million are anticipated, and which the NZTA is expected to announce and award this month (September).
HEB is already working as sole contractor on another section of the Waikato Expressway under a $160 million contract. The Road of National Significance will provide a more effective and efficient transport network connecting the business centres of Waikato, Auckland and Bay of Plenty. HEB’s current Cambridge section will pass to the north and east of Cambridge. It will connect with the existing Tamahere interchange to the north and with the existing SH1 to the south of Cambridge town.
Interchanges will be built at Discombe Road, Victoria Road and at the southern end of the Expressway where it will join the existing SH1, while a total of eight bridges are included in the scope; the largest being the Karapiro Stream Gully Viaduct crossing approximately 200 metres long and 40 metres high.
Last year, HEB Construction, as part of the Wellington Gateway Partnership (WGP) announced it had reached financial close on the Public Private Partnership (PPP) contract with the NZ Transport Agency for the Transmission Gully motorway project in Wellington.
The WGP was selected as the preferred contractor in December 2013. The project will be New Zealand’s first state highway project to be built as a PPP. The consortium consists of Leighton Contractors, HEB Construction, InfraRed Capital Partners, Bank of Tokyo-Mitsubishi UFJ (BTMU) and the Accident Compensation Corporation (ACC). WGP will finance, design and construct the project, and then operate and maintain the 27 kilometre Transmission Gully motorway for a period of 25 years.
HEB’s role is as a joint venture partner with Leighton Contractors, for the design and construction of the project. Work is expected to take five years and has a contract value of around $850 million. NZTA says the completed motorway will shorten travelling time, improve road safety and provide a secondary evacuation route in the event of a major earthquake.
Vinci Group has a turnover of $65 billion operating in over 100 countries, and employs more than 190,000 worldwide. With its strong focus on combining global expertise with local service, a company statement said it was well placed to provide HEB with the financial strength to support larger projects as well as access to additional expertise and experience.
Philippe Chavent, chairman of Vinci Construction International Network, said: “HEB Construction’s fundamentals form an excellent fit with those of Vinci and its new projects reflect its vitality.
“One good example is the new contract notification in April of this year to build a 27 kilometre four-lane urban motorway in Wellington. The project, in which HEB is participating as a member of a joint venture… is one of the island’s largest current infrastructure projects.”