Downer EDI prepares for expansion drive after ‘test’ purchase of rail contractor

Australian engineering services company Downer EDI is planning to expand into the British infrastructure market through acquisition.

The £1.6bn-turnover group is listed in the ASX top 100, which is the Australian equivalent of the FTSE 100. It made its first foray into the European market in April with the £8.5m purchase of South Yorkshire based rail contractor DMQA.

A spokesperson for Downer EDI, which until the DMQA purchase was located only in Australasia and the Far East, said: “We see potential over time to extend our operations and replicate our business model in other jurisdictions. Markets being considered are the UK, and in Asia, we are focused on Singapore and Hong Kong.”

The spokesperson added that the DMQA purchase was “a small investment” being used to test the UK market. DMQA is being rebranded as Works Infrastructure United Kingdom, a subsidiary of Downer EDI’s infrastructure business.

Downer EDI’s business plan in the UK is to build its interests in engineering and infrastructure maintenance, but it is known for treading carefully – its recent purchase of Australian asphalt supplier Emoleum took five years.

Other foreign organisations looking for acquisitions in the UK include Spanish construction giants Acciona and ACS. It is understood they are interested in buying UK concessions businesses, following in the footsteps of their domestic rival Ferrovial, which is buying airports operator BAA.

Skanska, the Swedish construction group, is also understood to be on the hunt for a civil engineering business valued at £30-50m.

Downer EDI at a glance

  • Founded: 1996, but the group can trace its roots back to 1870
  • Based: Sydney, Australia
  • Managing director: Stephen Gillies
  • Employees: 21,000
  • Turnover: £1.6bn (to 30 June 2005)
  • Pre-tax profit: £53m (to June 2005)