Brookfield’s decision to sell the business it rescued after the Wembley stadium saga marks the end of an era, writes Dave Rogers
Perhaps the most eye-catching thing about last week’s news that Multiplex is being bought was that the buyer was not private equity, given that private equity has been very active in this industry recently.
US firm Atlas is the most obvious example, with the company buying Bovis last year and before that Permasteelisa. It also tried to buy building products firm Brickability and is known to have explored acquiring Mace’s construction arm.
Meanwhile, Goldman Sachs bought Mace’s Consult business this year and others to have seen private equity investment in recent years include consultants Gardiner & Theobald and Ridge as well as the architect Foster + Partners.
Multiplex is instead being bought by Japanese engineer and contractor Obayashi for $650m (£490m). Multiplex employs around 2,300 people globally – including 700 in the UK – and has a turnover of $3.5bn (£2.7bn). Obayashi dwarfs the business it is buying with around 17,000 employees and $17.5bn (£13.2bn) in revenue.
Even though it has been owned by the Canadian private equity firm Brookfield since 2007, for many Multiplex is still an Australian business while in this country and, for older heads at least, it is the firm that rebuilt Wembley stadium.
All change at Multiplex
The deal, which was kept a closely guarded secret even though rumours have surfaced on and off over the years that Brookfield was looking to sell, was announced last Thursday. “Multiplex has been on the market for a while, so not a surprise,” was the verdict of one rival.
Still, the name of the would-be buyer did not leak and Building understands that the deal has been in progress for around nine months, with just a handful of people in the know. One of those would have been UK managing director Callum Tuckett, who was briefing staff about it all at the end of last week.
The news caps a busy few weeks for Multiplex in the UK. Last month, the firm moved out of its 99 Bishopsgate home of several years and into new premises at Aldgate Tower.
The switch is somewhat ironic as Brookfield is 99 Bishopsgate’s owner and now plans to demolish it and replace it with a 54-storey tower designed by RSHP which will become the fifth-tallest building in the City. If the job goes ahead, Multiplex is expected to build it.
The new owner: Obayashi
And now Mulltiplex is soon to have a new owner whose presence in the UK is limited to being an investor in a planned tower at 60 Gracechurch Street, due to be built by Bovis.
The owner’s UK subsidiary Obayashi Properties also owns the former FT building at Bracken House, elsewhere in the City, while it has a 75% stake in 20 Gracechurch Street, a little higher up from number 60.
For now, Obayashi says its focus for Multiplex is on Australia. In a statement explaining the move, Obayashi said: “The Obayashi Group has been expanding its overseas construction business, particularly in North America and South-east Asia, where market growth is expected.
“In addition, the group has been exploring opportunities to enter and expand into stable and high-growth markets. Australia has been identified as one of the most important markets, supported by population growth, urban development demand and stable economic conditions.
“Multiplex is one of the leading tier one construction companies in Australia, with a strong reputation for delivering high value-added projects, including high-rise buildings, hospitals and data centres and maintains a substantial order backlog.”
Recent trading at Multiplex
But Multiplex has had a tough few years in Australia, with several problem jobs – including a casino scheme in Brisbane – causing significant losses. In the past three years, it has reported cumulative losses of AUS$308m (£163m).
In the UK – which is around a third of Multiplex’s global business which also includes Canada, where it has around 150 staff working on commercial and residential schemes in Toronto – it has fared better over the same three-year period, turning in cumulative profits of just over £60m.
Here in the UK, the firm has rebuilt its reputation and reinvented itself so successfully that its involvement with Wembley stadium is barely mentioned nowadays.
To the general public, Wembley is just the really good stadium in north-west London with the arch that lights up. It is not known as the scheme which came close to seriously damaging Multiplex and left it having to effectively be rescued by Brookfield, with its reputation in tatters (see Multiplex and the Wembley stadium court battle, below).
Many thought that Wembley might be the end for Multiplex operating in the UK. But the firm remained in the market and over time rebuilt its reputation.
Notable jobs since have included the towers at 100 Bishopsgate and 22 Bishopsgate – although the latter resulted in losses for the firm believed to be around £60m.
Callum Tuckett’s leadership of Multiplex UK
Since 2020, it has been led by Tuckett, a former John Laing trainee who joined that business in the middle of the 1990s, leaving in 2017 – meaning he straddled the switch to Laing O’Rourke after it was bought by O’Rourke in 2001.
His contemporaries at Laing and Laing O’Rourke included Cathal O’Rourke, the founder Ray O’Rourke’s son and now in charge of Laing O’Rourke, Andrew Jackson, later Mace’s boss of construction and now overseeing Amazon’s data centre building programme across Europe, the Middle East and Africa, and Paul McNerney, now chief executive of listed steelwork contractor Severfield.
Tuckett, who joined Multiplex as chief operating officer, is well liked and well regarded by clients and rivals alike.
He took the leadership job when Ashley Muldoon – the Sydneysider who arrived in the UK in the early 2000s to be the firm’s Australia representative at Wembley – left in 2019 after more than 20 years at the business.
Tuckett has continued to reinvent the business to the extent that it is, along with Mace, the premier tier one contractor in the London commercial market.
“Multiplex is a leading global construction business with a track record of delivering some of the most complex large-scale projects in the world,” Brookfield private equity group chief executive Anuj Ranjan said last week.
“Since acquiring it, we have worked with management to sharpen operational focus, strengthen profitability and reposition the business for its next chapter.”
Client reaction to the buyout
Clients in London are pleased the firm has been bought by a builder. “It’s a big deal and a much better message,” one says. “They have been bought by a big, global contractor and that can only be good for them.”
Another adds: “I think it’s good for Multiplex as it’s probably a better fit, contractor to contractor, and no doubt Obayashi are a very experienced contractor/developer and Multiplex already work in many of the same markets like south-east Asia and Australia.
“I think their targeting the UK/London market is a vote of confidence albeit it’s more challenging in terms of legislation, planning and supply chain. It will be interesting to see how it develops.”
People speak well of Brookfield’s ownership of Multiplex. When the Chinese client on a residential scheme at One Nine Elms ran into funding problems a few years ago, the firm stepped in to make sure the supply chain was still paid.
But one client says: “The thing with private equity is that there eventually needs to be an exit, so there is always going to be a question of when? This frees them up from that.”
Next steps as the deal progresses
The sorts of questions clients have been asking about the deal, which is expected to complete in the fourth quarter of this year once regulatory obligations have been met in Japan and Canada, have been the kinds that would be expected: Will my project continue as planned? Will you still be building it? What next?
Multiplex’s global chief executive John Flecker insists: “It is business as usual for our clients, partners and people. Our operations, projects and brand remain unchanged.”
Multiplex and the Wembley stadium court battle
It is difficult to overstate how bad things had got on Wembley, but perhaps the nadir was a high-profile High Court trial that began in 2006 – while the stadium was still being built – between Multiplex and its former steelwork contractor Cleveland Bridge.
The case hinged on a central question: did Multiplex fire Cleveland Bridge from the job, or did Cleveland Bridge leave it?
What played out in court read like something out of a spy novel. Multiplex claimed Cleveland Bridge always intended to leave under a plan called Project Trafalgar; Cleveland Bridge insisted that was not the case and that, in fact, Multiplex wanted to replace it under something called the Armageddon plan, which it claimed involved busting the firm.
What was clear to anyone watching was that it was very acrimonious: relations between the parties had clearly deteriorated and this was perhaps best summed up by an email a Multiplex executive sent about Cleveland Bridge in 2004, which ran thus: “Fix and fuck them later?” Those five words perhaps more than anything cemented Multiplex’s reputation at the time.
By the time it finished the job in 2007, the Wembley scheme was over three years late and had more than doubled its original £445m cost. When Brookfield bought the business, the brand was so damaged it immediately renamed it Brookfield Multiplex.
But change always comes when one company buys another, so what might change for Multiplex in the UK? Right now, the firm occupies a central role in the London commercial market but its reach outside the capital and into other sectors is limited.
“I can see them forming joint ventures with Obayashi for schemes like airports, overstations, more infrastructure type stuff,” says one source. “It won’t be overnight but I think that’s where they’ll go.”
Of the UK, Obayashi says: “Through this acquisition, the Obayashi Group will accelerate full-scale expansion into the Australian and UK construction markets.”
From Wembley woes to City slicker: Multiplex in the UK
- Multiplex was set up in 1962 by John Roberts in Perth, Australia.
- It came to prominence in the UK as the firm that helped to build Stadium Australia for the Sydney 2000 Olympics before being appointed to rebuild Wembley stadium in the UK. The firm had, in fact, formed a joint venture with Bovis for the job but, somewhere along the way, that broke up – Bovis complained that it was not because of them – and Multiplex bid and won the job on its own.
- Roberts, who was highly regarded by those who came into his orbit, passed away in 2006 by which time he had been succeeded as chief executive by his son Andrew.
- Another important moment in its history came in 2003, when the firm floated on the Australian Stock Exchange – meaning, as a listed company, it was obliged to disclose information that it otherwise would not had it remained private. It was having to do this quite regularly in the mid-2000s as its losses on Wembley piled up.
- Once the Wembley job was finished – the first official opening game was the FA Cup final of 2007 – Multiplex was bought by Brookfield in the same year for £3.1bn. The business consisted of construction, development, fund management and FM.
- At the time, a Brookfield spokesperson said: “We believe in the UK market, we have assets here, but Multiplex in the UK is not our immediate focus. The emphasis will be Australia and New Zealand. The challenges in the UK are well documented but we are buying the future.”
- Four years later it expanded into Toronto, Brookfield’s home city, and in the UK, where it arguably became the go-to tower builder in London.
For now, it would seem to be business as usual. “I’m not that concerned,” is the assessment of another client.
With Mace looking for a new name – and chief executive – and Bovis now returning to a much more prominent role in the sector after several years of drift under Lendlease, does this mean new players will be moving in too? McAlpine, McLaren and Skanska are all established in London but what about others?
Kier counts Derwent and Stanhope among its clients but its focus is on public sector and regulated work. Wates has just appointed George Mosey as the new boss of its London construction business. “I know George and he’s good,” one peer says. “I think they’ll have a look, but slowly.”
But another firm is more emphatic: “I don’t like working for developers. They are tough boys, so no.” Multiplex, on the other hand, knows what it’s doing in this area, which is increasingly attracting Japanse investment as well, so expect them to be going nowhere and continuing to be a major player.
A brief history of Obayashi
- The firm was founded in 1892 by Yoshigoro Obayashi as a civil engineering and building construction contractor in Osaka. In 1904, the company name was changed to Obayashi Corporation.
- It worked exclusively in Japan until the mid 1960s, when it built a bridge in Indonesia.
- It worked with Multiplex on Stadium Australia, the main venue for the Sydney 2000 Olympics. It says that, during the 1990s, it “began to undertake aggressive overseas development in response to expanding overseas demand, widening the range of our operations”.
- Its overseas construction jobs since have included the Taiwan High Speed Rail, the Colorado River Bridge and the Dubai Metro. Its main ongoing project in the UK is the 60 Gracechurch Street development in the City, due to be built by Bovis.
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