Building new prospects for Australian contractors in Asia
With investments in two Australian builders, Japan’s Kajima Corporation is helping build a new, Australian tier-one construction company with improved prospects in overseas markets. In March 2017, Kajima followed up its existing majority stake in Melbourne-based residential and commercial company, Icon, with a 70 per cent stake in social infrastructure specialist, Cockram. Kajima Corporation plans to merge the two companies in 2019.
Image courtesy of Kajima Corporation
Turning home-grown expertise into overseas opportunities
Kajima’s investment boosts the prospects for Australian contractors trying to reach overseas markets. Kajima Corporation and Cockram currently work across the Asia-Pacific region, but with different clients. The deal delivers the contacts, capital and expertise that will help Australian companies leverage niche capabilities in industrial process and theme park projects throughout the Asia-Pacific region and the United States (US).
The commercial tie-ups will allow the companies to exploit market synergies. Cockram has a long history of successful contracts in China and New Zealand. One of Japan’s big-five builders, Kajima Corporation is also strong across the Asia-Pacific region, but lacks Cockram’s client list, which includes predominantly western companies from Europe and the US.
With annual revenues of A$21 billion, Kajima Corporation has a sufficiently strong balance sheet to enable Cockram and Icon to take on bigger projects in Australia and overseas. The Australian companies will also gain access to intellectual property that delivers a competitive edge. Based in Chofu-City, Tokyo, The Kajima Technical Research Institute employs 300 researchers who are pioneering advanced structures, earthquake resistance, geotechnics, environmental research and new methods of safe construction.
‘Kajima’s investment provides us with the financial resources and technical expertise to enable us to grow our existing specialist market in social infrastructure in Australia,’ says Malcolm Batten, Managing Director, Cockram. ‘It will … allow us to expand our international business in Asia Pacific and the United States where demand is growing.’
Growth opportunities for niche skills
The two Australian builders have industry specialities that Kajima aims to nurture. Melbourne-based Icon has established a reputation for premium and prestige projects in the commercial and residential sectors.
‘Backed by Kajima’s world-class technical and financial resources, I believe Icon will be even stronger and will be able to successfully undertake tier-one projects and other large and sophisticated engagements,’ says K. C. Koshijima, Kajima’s Managing Executive Officer and General Manager for its overseas operations.
Icon Director, Nicholas Brown, agrees that the tie-up with Kajima Corporation increases scope for expansion: ‘[Kajima Corporation] has a track record around the world of taking businesses of our size, maintaining the local management and helping them grow by giving them balance sheet strength and their technical ability.’
Government-level trust
Icon aided Kajima’s investment strategy by suggesting fellow Victoria-based Cockram as a potential partner. Cockram is a specialist in social infrastructure projects such as health facilities, laboratories and clinics.
‘Working with a Japanese company has proved positive and we have established a high level of trust,’ says Batten. ‘The wider Japan–Australia alliance is positive for us.’
With a history stretching back 175 years, Tokyo-based Kajima Corporation is one of Japan’s ‘super-general contractors’, with annual revenues of A$21 billion. The company’s involvement in Australia began in the late 1980s when Kajima Corporation executed hotel and commercial projects in Victoria and New South Wales.
As the Japanese property market experienced a period of transition in the 1990s and 2000s, Kajima Corporation restructured and focused on domestic business and other overseas markets including the US, South East Asia and Europe. Its purchase of Icon marked a strategic return to the Australian market, based on partnering with established, mid-sized contractors and project management companies.
Kajima Corporation plans to gradually merge Icon and Cockram during the 2017–2019 time frame, and create a new Australian builder-contractor. With decades of experience building for western clients in the Asia-Pacific region, Cockram will fill a lucrative gap in Kajima Corporation’s international portfolio.
Building with CSR
Cockram continues to support a highly successful corporate and social responsibility program that focuses on Indigenous Australians. Barpa is a joint venture construction company, 51 per cent owned by the Federation of Victorian Traditional Owners Corporations, with the remainder held by Cockram. This partnership is structured to deliver capital works projects across Australia.