Temasek, JTC seek mega merger of urban planning firms

By Yasmine Yahya, The Straits Times, 5 Sep 2014

TEMASEK Holdings and JTC Corp will begin exclusive talks to explore the merger of four of Singapore's key urban planning and development firms, the two companies said yesterday.

The plan is to form a major player that would have the scale, skills and resources to participate in the vast urbanisation projects cropping up in Asia.

* JTC and Temasek to create integrated urban solutions platform

Ascendas, Jurong International Holdings (JIH), Singbridge Group and Surbana International Consultants, with their complementary expertise and geographical footprints, could take on the world, some noted.

Ascendas has strong capabilities in industrial and business space development, while Surbana and JIH are skilled in building homes and master planning.

Singbridge is an "aggregator" of urban solutions for large-scale developments, having brought together players for projects such as the Guangzhou Knowledge City and Tianjin Eco-city.

The new entity could be valued in the billions; Ascendas alone had a revenue of around $700 million last year. Players in the sector include United States-based AECOM, with a market value of US$3.7 billion (S$4.6 billion).

"The merged group will have the scale, capabilities and resources to participate in the entire urbanisation value chain, deepen its presence in existing markets and develop new ones," said JTC chief executive Png Cheong Boon.

Ascendas and Jurong International are both JTC subsidiaries, while Singbridge and Surbana are Temasek units.

"Apart from the trends we see with increasing urbanisation in growth markets, we also see an emerging and keen interest in building sustainable cities, both inside and outside Asia," said the head of Temasek's enterprise development group, Mr Dilhan Pillay Sandrasegara.

DBS economist Irvin Seah said the move could benefit the broader Singapore economy, not just the four merging firms.

They could tap into urbanisation opportunities in China, India and Myanmar, he said, but "we should think about how to enhance the multiplier effect across the Singapore economy".

"Besides these four players, medium-sized enterprises could also benefit by contributing products and services across the urbanisation value chain," he noted.

Mr Scott Dunn, previously chairman of the Singapore council of the Urban Land Institute, said a merger of the four companies would also benefit the communities they work with in future.

The operating entities of Ascendas, JIH, Surbana and Singbridge would continue their business as usual, including the listed entities under the Ascendas Group. The proposed merger would not trigger any general offer obligations on the part of the parties.

The due diligence process and finding a fair market valuation for the proposed merger would take a few months, and the eventual group structure is still being evaluated, Temasek said.

* JTC, Temasek seal deal to merge four subsidiaries
Units will form one of region's largest integrated urban solutions providers
By Wong Wei Han, The Straits Times, 17 Feb 2015

INDUSTRIAL landlord JTC Corporation and Singapore investment company Temasek have officially sealed their agreement to merge four of their subsidiaries into a single platform.

This powerful new platform, worth $5 billion, will become one of the region's largest integrated urban solutions providers.

The idea of merging JTC subsidiaries Ascendas and Jurong International Holdings (JIH) as well as Temasek units Surbana International Consultants and Singbridge Group was first flagged in September last year.

After due diligence on both sides, the final partnership was formally announced by senior figures from both parties at a press conference yesterday.

The new platform will be a 49:51 partnership between JTC and Temasek, with a total value of about $5 billion.

Within the platform, which will be formed within the first half this year, the four companies will be organised into two arms.

The companies are still finalising details of the merger, including the official names of the new entities. But the four companies should see minimal impact to their current business and operations, JTC and Temasek said.

Ascendas and Singbridge will become the asset investment and holding arm, while Surbana and JIH will be the technical unit offering construction and engineering services.

Singbridge chairman Wong Kan Seng will be chairman of the investment and holding unit, while current Singbridge executive director Miguel Ko will become the chief executive.

Meanwhile, Surbana chairman Liew Mun Leong will chair the technical unit with Mr Wong Heang Fine as chief executive.

The unique twin-chairman structure is to ensure a clear separation to avoid conflict of interests, and to allow the engineering and construction units to grow independently, Temasek enterprise development and Singapore head Dilhan Pillay Sandrasegara said during the press conference.

The merger is complementary in nature and will position the companies for Asia's urbanisation boom, Mr Wong Kan Seng noted.

"By 2025, 600 of the world's largest cities will generate about 60 per cent of global gross domestic product, and emerging cities will account for almost half of the world's growth," Mr Wong said.

"As an integrated company, we will have better scale and deeper expertise to handle many large- scale and complex urban development projects."

All four companies are already well-established players in urban, industrial and infrastructural development.

They combine an extensive portfolio that includes the Guangzhou Knowledge City and Tianjin Eco-city projects in China, industrial park development in Singapore and India, as well as infrastructural consulting in the Middle East, among other things.

Just last month, Surbana and JIH were appointed master planners for the development of the new capital city for India's Andhra Pradesh.

Mr Liew said that the Surbana-JIH unit is set to grow its consultancy fees of $500 million currently to $1 billion to $1.5 billion in the next three to five years as a result of the merger, while doubling its combined headcount of 3,200 people.

In a related development, CapitaLand yesterday announced that it is selling its 40 per cent stake in Surbana to Temasek subsidiary Arakan Investments for $104 million cash.

Arakan will in turn sell its 60 per cent stake in CapitaLand Township Holdings to CapitaLand for $240 million.

With this move, Surbana will be fully owned by Temasek.

Deal combines each firm's strengths into potent force
It would create an urban planning giant in the region
By Lee Su Shyan, The Straits Times, 5 Sep 2014

SIZE counts. Big is beautiful. Take your choice of phrase as both apply to the dramatic news that four of the country's leading players in urban planning and development could merge.

If this ambitious deal comes off, it will, at a stroke, create one of the most powerful urban development groups in the region.

The considerable individual strengths of the four entities - business park developer Ascendas, architecture consultant Jurong International and Temasek Holdings units Surbana Group and Singbridge International - would combine into an industry colossus. It could marshal a potent combination of master planning, design and other development skills to reap huge rewards as developing nations ramp up their spending on urban infrastructure.

That is where size comes in: Governments anywhere prefer dealing with large players with the entire range of expertise at their command, when it comes to urban planning, so a multi-skilled giant will trump individual players almost every time. As Emeritus Senior Minister Goh Chok Tong said years ago, when talking about bank mergers, size helps when you are up against bigger sumo wrestlers.

Urbanisation in Asia, and the hundreds of billions of dollars it will generate in development fees, is no distant prospect. According to World Bank estimates, China's urban population may hit the one billion mark by 2030, up from approximately 731 million as at last year.

Preparing for similar shifts in other countries will generate vast potential for firms in the urban planning field, but the challenge goes far beyond just throwing a few industrial entities into one area, and homes and shops in another.

What countries, especially in Asia, want to see is how people can best live, work and play in an urban environment. In other words, how these different needs can be integrated.

It is this looming challenge - and the rewards it can bring - that is likely behind the merger talks announced late yesterday. Singapore itself is the best advertisement for such services. The country has a brand name that carries weight. Witness the many Chinese visitors impressed at how Singapore has evolved so quickly into a city that offers a comfortable working and living environment.

These merger talks set the stage to create another Singapore world-beater. Previous entities that held that lofty position are finding the going harder these days. Singapore Airlines, for example, is operating in a fiercely competitive environment.

The proposed new entity would allow four already successful firms to show increased strength in numbers, combining their skills in a complementary manner instead of operating individually.

This behemoth would certainly have the heft to take on rivals overseas, while it could well rope in Singapore's small and medium-sized enterprises and allow them to ride on the entity's expansion and growth to develop their own expertise.

While this merged entity would have the wherewithal to take on larger projects, these projects might come with more risk. To a certain extent, Singapore's involvement in various projects in China such as the Suzhou Industrial Park or Tianjin Eco-City illustrate how ambitious projects will come with their attendant risks and missteps.

Key to the success of this deal will be the eventual structure of the new entity and the determination to make it succeed.

This deal may be an arranged marriage made in heaven, but let's not pop the champagne just yet.

Let the marriage work.

PROPOSED MERGER OF URBAN PLANNING FIRMS

S'pore eyes slice of pie worth about $4 trillion
Entity could vie with world's top firms in huge city-building market
By Yasmine Yahya, The Straits Times, 6 Sep 2014

TRILLIONS of dollars, billions of people and scores of new cities waiting to be built.

These are the kind of stakes that Singapore is playing for as talks kick off to merge four of its leading urban planning and development firms and fight for a share of the city-building pie.

Temasek Holdings and JTC Corp said on Thursday that they will explore the merger of Ascendas, Jurong International Holdings, Singbridge Group and Surbana International Consultants so that the combined entity could fight for bigger projects.

The potential market is certainly a huge one.

A United Nations report in July noted that an additional 2.5 billion people will live in cities by 2050, with nearly 90 per cent of that increase concentrated in Asia and Africa - and many of these cities are yet to be built.

India is projected to add 404 million urban dwellers in this period, while China will add 292 million.

"Just looking at China alone, that is akin to building 50 Singapore-size cities over the next 35 years," noted Professor Heng Chye Kiang, dean of the National University of Singapore's School of Design and Environment. "That is a lot of work to be done, from building airports and seaports to bridges and roads and housing."

There is no data on how big the global urban planning industry is, but Singapore Management University professor Annie Koh said estimates have shown that there will be about US$3 trillion (S$3.8 trillion) of infrastructure projects worldwide over the next decade.

"Even if we get a small percentage of that, it is still very sizeable," she said.

And this is an industry that could have long-term benefits for Singapore's economy, added Prof Koh. "Revenue streams will take time to gestate. You can't make quick returns from roads, power plants and ports, but it would be a sustainable stream of income in the long run."

If the merger goes through, the four firms would be even bigger than the major international companies that dominate the urban planning market today, said Dr Stephen Cairns, scientific director of the Future Cities Laboratory at the Singapore-ETH Centre.

The four Singapore entities have around 4,000 employees and generate about $1.2 billion in revenue combined. That could put them in the same league as the world's three biggest urban planning firms - Gensler and Aecom from the United States and Japan's Nikken Sekkei. Each has around 1,400 employees and US$400 million in income.

"Singapore companies have extensive experience and capabilities across the value chain, including master-planning, engineering, procurement and construction, system integration and operations," noted Singapore Business Federation chief executive Ho Meng Kit.

"Many of them are already exporting these services and have participated in projects overseas. Such activities will continue to grow with worldwide demand increasing."

Merger 'unlikely to drive up industrial rents here'
By Jacqueline Woo, The Straits Times, 6 Sep 2014

IT IS unlikely that industrial rents here will rise in the light of the proposed merger of four operating subsidiaries under industrial landlord JTC Corporation and Singapore investment firm Temasek Holdings, analysts said.

Talks are afoot to merge JTC's Ascendas and Jurong International Holdings (JIH) with Temasek's Singbridge Group and Surbana International Consultants Holdings.

"All four of these companies are very much into overseas play," said Mr Ong Teck Hui, national director of research and consultancy at Jones Lang Lasalle. "It is more likely that they are trying to synergise and capitalise on all their strengths to tap opportunities in the emerging markets, rather than the domestic one."

Executive director of research and consultancy at SLP International Nicholas Mak expects industrial rents here to "remain stable in the short term".

"Even if these companies were to raise their rents aggressively, tenants here can easily move to another place," he said.

Mr Mak pointed to the other industrial properties available, as well as the "steady stream of supply" set to enter the market in the next two to three years.

Businesses here are not ruffled by the news, said Mr Victor Tay, chief operating officer of the Singapore Business Federation.

He noted that each of the four companies targets different segments in the real estate market.

Ascendas, for instance, is a business real estate specialist, while Surbana is an urbanisation consultancy skilled in building homes and master planning.

"Even if they are amalgamated, their current specialisations help to supplement one another as part of a value chain for projects, rather than to dominate market share."

A spokesman for Temasek told The Straits Times yesterday that its portfolio companies are "independently managed and compete freely in the market".

Separately, JTC said it does not expect the proposed merger to have an impact on the industrial property market, which is "diverse and competitive".

The four entities in the proposed merger combined will form only 10.5 per cent of the market.

"There are also ample substitutes to their properties, which are made available by the other players in the market," said a JTC spokesman.

Temasek, JTC units have history of tie-ups
Due to merge, the firms have shared expertise on joint projects in the past
By Yasmine Yahya, The Straits Times, 11 Sep 2014

THE four units of Temasek Holdings and JTC Corp now conducting due diligence ahead of a planned merger already have a rich history of collaborations.

The two groups announced last week that they were exploring a merger of Ascendas and Jurong International Holdings (JIH), both JTC units, with Temasek-owned Singbridge and Surbana.

The idea is to create a major urban planning and development firm able to capture big projects in developing markets that are undergoing rapid urbanisation.

The new entity would provide comprehensive services and solutions covering the project from start to finish.

In fact, the four firms have tied up in various combinations several times over the years to benefit from each other's expertise.

Ascendas and JIH told The Straits Times via e-mail yesterday that past collaborations with Singbridge and Surbana helped them to take on larger projects.

For example, tying up with Singbridge enabled Ascendas to take up the Ascendas OneHub Guangzhou Knowledge City project.

This is the first integrated business park development within the Sino-Singapore Guangzhou Knowledge City. Ascendas is the master planner of the OneHub, while Singbridge is its co-master developer.

Spokespeople from Ascendas and JIH added that cooperating with Singbridge and Surbana also enabled them to take part in projects that required expertise beyond their core competencies.

These include the Dalian Chang Xing Dao Industrial Park and DaNaHai International Petrochemical Park in Guangdong, China.

For both projects, JIH unit Jurong Consultants was tasked with industrial and township planning while Surbana did the residential planning.

"Singbridge invests in, develops and manages integrated cities and sustainable urban solutions across the region, while Surbana has capabilities in master planning and design," the spokespeople said.

"Both Singbridge and Surbana brought valuable expertise to the table that complemented Ascendas' and JIH's core capabilities in building business space solutions and integrated developments."

Data from Temasek shows that at least five other projects have involved two or more of the four firms tying up with each other.

These include Tianjin Eco-City, which involves three of them. Singbridge owns a 10 per cent stake in the project, Surbana developed its first public housing development and Jurong Consultants served as the conceptual masterplanner for the Tianjin Eco-City Business Park.

While most of their collaborations have been in Asia, the firms have also joined hands in markets as far away as the Congo, in Africa, where Surbana and Jurong Consultants are both involved in the Special Economic Zones of Oyo-Ollombo and Pointe Noire.

Observers have said that by forming a merged company, the four firms stand to capture even bigger projects worldwide, at a time when many developing nations, including nearby giants China and India, are building cities to create economic opportunities for their growing populations.

"Large firms have convening power - they have the capacity to bring diverse specialist skills together," noted Dr Stephen Cairns, the scientific director of the Future Cities Laboratory at the Singapore-ETH Centre.

"They must use this convening power to put the best of the world's current research in city planning and urban design into action. This work takes a little bit more risk than is the norm. Bigger firms have the robustness and scale to take that risk."

Ascendas and JIH said that before the announcement of the planned merger was made public, they had informed and explained to their staff the rationale behind the proposal, "which seeks to provide more growth opportunities not just for the four businesses, but also our people".

"Following the announcement, both JTC and Temasek have also met the management teams of both Ascendas and (JIH) to discuss plans with them. Staff will also be kept updated on any new developments," Ascendas and JIH said.

Regional chapter beckons for local urban planners
The mega-merger of Singapore's urban planning firms will give them an edge in leading urbanisation efforts in Asia. But size is not the only factor that matters in this potentially game-changing deal involving Ascendas, Jurong International, Surbana and Singbridge.
By Stephen Cairns, Published The Straits Times, 30 Sep 2014

THE recently proposed merger of four of Singapore's architecture, urban design and planning firms - Ascendas, Jurong International, Surbana and Singbridge - would dwarf the world's largest existing comparable firms.

Currently, the biggest firms of this kind are the United States' Gensler and Aecom and Japan's Nikken Sekkei, each with about 1,400 employees, and around US$400 million (S$510 million) in income. The merged Singapore firm, which by comparison could boast over 3,000 employees and more than US$1 billion in revenue, would be a pretty big beast in the global market.

Size has its advantages. A large firm can convene diverse specialist skills - such as architectural design, urban planning, engineering, project management, environmental engineering and economic planning - to tackle the complex, multi-disciplinary projects that contemporary cities require.

Large firms can also be good at putting new city planning and urban design research into action. The risks in building with a new sustainable material or energy system, for example, are often best borne by firms with sufficient scale and robustness.

But size isn't everything. To consider this merger as merely a matter of economic muscle would be to miss the more significant point about Singapore's growing role in the urbanisation of Asia.

The merger represents a significant culmination of Singapore's own history. It could catapult the Republic's planning agencies into a much larger regional role, with an opportunity to shape Asia's future cities.

Ascendas, Jurong International and Surbana each emerged from a government agency - the first two from JTC Corporation and the latter from the Housing Board - while Singbridge is wholly owned by Temasek Holdings.

Each found its raison d'être in promoting and supporting Singapore's development and urbanisation. As the city reached First World standards in housing, urban planning and industrial planning, these firms began to export their expertise to neighbouring countries in Asean and beyond from the early 2000s.

Their merger would be a clear sign that knowledge and skills developed in Singapore can be confidently exported in more integrated and comprehensive ways.

It would combine the expertise of the four firms: Ascendas' know-how in developing business parks and industrial land; Jurong International's specialisation in the high-tech, bioscience, marine and infrastructure industries; Singbridge's skill in economic zones and integrated and sustainable cities; and Surbana's track record in residential and mixed- use precincts, towns and cities.

When packaged together, this remarkable collection of skills could make for a very powerful, perhaps unique, vehicle for responsible urbanisation. The capacity to consider a city's hardware - buildings, infrastructure, resources and land - in a more integrated way is one pathway to more sustainable forms of urbanisation.

Singapore sits smack in the middle of one of the world's most rapidly urbanising areas. Half the world's population is contained in a territory within a six-hour flight from Singapore. The majority of that population, currently rural, will reside in cities by 2050.

Cities are needed to house these future urbanites. How will they be planned? How will electricity, water and waste be managed? How best to integrate and manage everyday technologies - air conditioners, refrigerators, computers, motorcycles and cars? Who will plan the rail, road, pedestrian and cycling networks that connect them?

Singaporean firms and government agencies have very good answers to many of these questions, as evidenced in their track record of producing integrated townships and industrial centres that are served by efficient utilities and public transport systems.

But what kind of urbanisation would result from the export of Singaporean planning and design knowledge? Would future Asian cities look like mini-Singapores, with their neighbourhoods resembling Ang Mo Kio or Toa Payoh?

The challenge would be to understand how to use Singapore's experience and adapt it for each new city. The likely ideal would be a mix, resulting in a series of unique hybrids in each new city where local forms, practices and traditions of city-making combine with modern principles tried and tested in Singapore.

Emerging examples of this kind include the Mahindra World City project in Chennai, India; an 11,800-unit public housing township in Bandar Cassia in Penang, Malaysia; the Singapore-Sichuan Hi-Tech Innovation Park in China; and the Ascendas-Protrade Singapore Tech Park in Binh Duong, Vietnam.

These developments, each planned with expertise from Jurong International, Surbana, Singbridge and Ascendas respectively, variously incorporate mixed-use, work-live arrangements that aim to catalyse local economies, cultures and environments. They work to integrate transportation infrastructure, local natural landscapes, recreational spaces and cultural facilities, some of which take their architectural cues from regional precedents.

The importance of adapting to local cultures and contexts should not be underestimated. Any successful urban planning firm must be able to connect with the future residents and communities of their developments.

This involves consulting and collaborating with community groups too, which requires expertise not always associated with architecture and planning: such as anthropology, psychology, sociology and history.

Responding effectively to the unprecedented challenges of urbanisation depends heavily on how large planning and design firms are organised, how the available expertise is marshalled, what culture of design they promote, and how they integrate the latest research.

In this sense, the merged entity could be one of the lead authors in a second chapter in Singapore's story of national development. But, this time, the characters are not only Singaporeans, but also the millions of people who aspire to improve their lives by moving to cities in India, China and Asean.

The writer is scientific director of the Future Cities Laboratory, Singapore-ETH Centre, a collaboration between the National Research Foundation and ETH Zurich, a Zurich-based university specialising in technology, engineering and mathematics.