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“NRW to look for raising if BGC deal succeeds
Bridget Carter
November 4, 2019

Analysts say road construction gives BGC a good revenue base.


NRW is expected to work with investment bank UBS for an equity raising should it proceed with a deal to buy BGC Contracting.

The company confirmed to the market Monday that it was the preferred bidder for the contracting assets of BGC, the company of the late billionaire Len Buckridge.

DataRoom reported on July 1 that NRW was the front runner to buy BGC Contracting, hiring Longreach Capital as its adviser and sounding out investors about an equity raising for an acquisition.

However, it is understood that the company left the contest when it offered a price below the aspirations of the vendor, advised by Macquarie Capital.

Initially, the company was anticipated to fetch up to $400m.

Emeco was also in talks to buy the asset.

Talks were reignited between BGC’s investment bank and NRW and now it is understood investment bank UBS is on standby for a capital raising for the $848m listed contractor.

BGC Contracting consists of three parts: contract mining, civil construction, which also undertakes some work in the resources sector and DIAB Engineering, a maintenance shutdown business that provides mechanical and structural services to the resources industry.

Overall, it has a workforce of about 2000 people. It is considered one of the leading West Australian contractors when it comes to roads and Deutsche says its longer-term mining contracts also provide medium-term revenue certainty and access to equipment.

It is understood that BGC Contracting generates somewhere between $800 million and $900m in annual revenue, with its earnings margins understood to be somewhere between the low double digits and high single digits and a contract pipeline worth more than $1.7 billion.

“NRW believes there is significant merit in the acquisition of BGC Contracting and would only enter into a transaction applying a similar discipline to previous transactions on terms that deliver appropriate value for NRW shareholders, including a requirement that any transaction be EPS accretive,” the company said.”