Ferrovial plans UK joint ventures to boost PFI work

Ferrovial, the Spanish construction and services group, is planning to increase its penetration of the UK's PFI market by forming joint ventures with British contractors.

Ferrovial Agroman, which is the construction arm of Ferrovial, is understood to have discussed a link up with contractors including Bovis Lend Lease, Costain and Shepherd Construction.

Last month the firm, which is also the parent of support services firm Amey, said it was considering a takeover of UK airport operator BAA and is understood to be in talks with Australian bank Macquarie over a possible joint bid.

A source close to the group said: "Ferrovial's appetite for UK work is not abating, but it would not take the same approach as companies such Kajima, Multiplex, Hochtief and Bilfinger Berger." These companies have bid for projects in their own right without tying up with British firms.

Ferrovial Agromen demonstrated its appetite for PFI projects by bidding for a Bradford schools deal. It also put in a tender for Peterborough's PFI hospital with Shepherd, although on that occasion it lost out to Multiplex.

The contractor is understood to have teamed up with Costain to bid for a Leeds school project and the source said it was looking to do a lot more of the same.

Ferrovial is in a healthy financial state. On Monday it revealed a 22% rise in profit in 2005, to E1.3bn (£890m) on a E9bn (£610m) turnover, an increase of 24%. The firm declined to comment about the status of its BAA bid after the results were announced, but when it made its original statement last month, a spokesperson for the group said that a takeover would make sense because it owned Belfast City airport and had a 50% stake in Bristol City airport.

Ferrovial has a two-thirds stake in the London Underground consortium Tube Lines, acquiring a one-third stake automatically when it bought Amey in 2003 for £81m. Ferrovial then bought a further one-third stake from Jarvis last year.