Sunday 11th Apr, 2021

Spanish firm strikes deal with Ausenco

Isaac Plains Maintenance Improvements. Image: Ausenco

Brisbane-based engineer Ausenco has announced a strategic alliance with Spanish multinational construction firm Duro Felguera, with the two companies looking to work together towards global EPC opportunities.

A classic victim of the mining boom-bust cycle, Ausenco was worth $16.30 a share at its peak in 2008. After steady declines in the last 5 years, the engineer was worth just 26 cents a share on the ASX on Monday, prior to the announcement of the Spanish deal.

But with the news that Duro Felguera (DF) has bought a 4.99% stake in Ausenco, and the two companies have signed a Memorandum of Understanding to form a strategic alliance, the share price has lifted slightly to around 31 cents a share overnight.

The MoU was signed, Ausenco said, to take advantage of the companies’ complementary positioning in the market, along with their experienced workforces and comprehensive service offerings.

“The alliance will leverage each party’s extensive geographic footprint and strong track record of engineering expertise and project delivery to create value for our clients and shareholders,” Ausenco boss Zimi Meka said.

“Both companies have a history of successful EPC project delivery; currently over 85% of DF’s revenue is generated through EPC. The collective reputation for project delivery, together with well-established systems and controls, will ensure that the alliance can leverage opportunities to maximise value and manage risks.”

Meka said discussions with existing and prospective clients have indicated a significant shift in the focus of resources sector financiers and project owners towards cost certainty.

“As the size and complexity of projects continue to grow, there is an increasing demand in most sectors of our market to have projects delivered on an EPC basis,” he said.

Combined, Ausenco and DF’s current EPC project pipelines are worth more than $14bn.

Meka said the company considered DF’s 4.99% shareholding in Ausenco complementary to the alliance and their longer term working relationship.

DF boss Angel del Valle said there was little overlap of current clients or markets between the two companies, despite their complementary skills.

“DF had been looking for a relationship with a world-class organisation like Ausenco to enable it to expand its own proven track record for global EPC delivery in these sectors,” he said.

“This alliance provides both companies a real opportunity to grow market share across the mining, infrastructure, oil & gas and energy markets.”