National civil and structural engineering player VDM Group Ltd has just completed a $12 million capital raising to fund an aggressive acquisition strategy and support current contracts worth nearly $70 million.
National civil and structural engineering player VDM Group Ltd has just completed a $12 million capital raising to fund an aggressive acquisition strategy and support current contracts worth nearly $70 million.
Its most recent acquisition was the $4.7 million paid for a 75 per cent controlling interest in Cape Crushing & Earthmoving Contractors Pty Ltd.
Northbridge-based VDM chief executive, John Farrell, told WA Business News the group was cashed-up and looking to pursue further acquisitions in the next 12 months.
“Queensland is a focus for our next acquisitions, as like Western Australia it is experiencing a resources and infrastructure boom, and we will look to strategically position ourselves in the state,” Mr Farrell said.
The latest capital raising caps a busy half-year for VDM, which completed its $8.2 million initial public offer, including the acquisition of two businesses, before listing on the Australian Stock Exchange in February.
Since then it has acquired another new business, and signed unconditional agree-ments to buy two more, both of which will become part of the VDM stable on July 1.
The acquisitions bring to eight the total number of businesses in the VDM group.
In addition, since March, it has inked about $67 million in new contracts.
Mr Farrell said about $5 million from the capital raising would be used for the Cape Crushing acquisition and another acquisition, that of Darwin-based environmental consultancy business EcOz Environmental Services.
“The balance of the funds will be used for further acquisitions and to provide working capital for the group,” he said.
Cape Crushing is a broad-based WA resource sector contractor and will add to VDM’s portfolio of engineering and project management businesses.
The remaining 25 per cent of Cape Crushing will be retained by interests linked to its managing director, Mike Heddon, who will remain in the business in an executive capacity for a minimum of three years.
Mr Farrell said Cape Crushing represented a significant growth path for VDM by diversifying the business into resources contracting.
“It is planned to integrate Cape Crushing into the VDM Group, thus enabling a greater range of services to be offered to VDM Group customers, especially in the resources sector,” he said.
Cape Crushing was started in 1995 as a supplier of crushed rock for road construction, before diversifying into mining and civil earthworks in the Goldfields.
The Bassendean-based group forecasts revenue to exceed $30 million in the 2006 financial year, and has plant and equipment worth more than $24 million.
VDM’s acquisition strategy gathered momentum from February 2006 when the group acquired Perth-based Civmec Construction & Engineering, and Queensland resort planner and developer Burchill Partners, as part of its IPO, and then acquired Subiaco firm Ewing Consulting Engineers just before the ASX listing.
In June, VDM announced it intention to buy EcOz for $250,000.
EcOz is seen as a strategic investment for VDM to expand its presence in the Northern Territory, where EcOz has operated for more than 10 years.
The group also hopes to develop synergies through the EcOz acquisition with existing VDM subsidiary, environmental engineers, Belleng VDM.
The group also has a heavy book of work in place across its subsidiary businesses.
Another in the VDM stable, Keytown Constructions, last month signed a $3.2 million construction contract that, in a first for VDM, will utilise a new construction technique from the US (see page 17).
Also in June, VDM subsidiary, Van Der Meer Consulting, was commissioned to undertake the engineering design for a major land development at Airlie Beach, North Queensland.
The fees on the project are percentage based, and may be worth up to $6 million for VDM.
In May, Civmec was awarded a $20 million contract with Rio Tinto for the civil and concrete works at Rio’s Tom Price mine. This contract took Civmec’s current work in hand to $66 million.
Keytown was awarded a $4.2 million contract to build a warehouse in Hazelmere in Perth’s outer suburbs in May.
In March, Civmec announced a construction joint venture in north Queensland’s Bowen Basin for the Ports Corporation of Queensland. Civmec’s share of the project is estimated at $17 million.
And Civmec secured another contract with Rio Tinto in March, also worth $17 million, for earth moving and concrete works at the Yandi mine in the Pilbara.
