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French engineering firm prepared to spend ‘billions’ amid fresh UK push

Colas sees opportunities in infrastructure markets left high and dry after Carillion’s collapse.

French engineering firm Colas has pumped fresh cash into its UK business and is ready to spend billions on takeovers in a push to gain market share in a sector still reeling from the collapse of Carillion.

Its renewed focus on Britain follows an 18-month review which Carl Fergusson, an executive director at the firm, said identified new opportunities in the UK and prompted the creation of a new business unit – Colas UK Projects – in January.

While he would not divulge the size of the investment from the French parent company, Mr Fergusson said the focus would be on bidding for infrastructure projects rather than less-lucrative maintenance contracts, but that its growth targets will rely on a raft of takeovers in the UK.

“The pace of change that we have decided that we want to achieve can’t be achieved just by organic growth. So it will require acquisitions,” he told the Press Association.

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Carl Fergusson is an executive director at Colas UK (PA)

When asked how much Colas is willing spend on UK deals, Mr Fergusson highlighted recent acquisitions in Canada, where the company recently clinched a 913 million Canadian dollar deal (£517 million) to buy road construction and bitumen distributor Miller Asphalt Group.

“You will find that we’re not talking about millions, we’re talking about billions,” he said.

Colas’ cash is also likely to go further in the UK, given the strength of the euro versus the pound.

Mr Fergusson stressed that Colas’ UK investments were not prompted by Carillion’s failings, but admitted the collapse “presented some opportunities” – with hundreds of millions of pounds worth of unfinished public contracts having been left in its wake.

However, he stopped short of confirming whether Colas had put forward bids for those tenders.

“We have looked at certain opportunities that have flow out of the Carillion collapse but we are bound by confidentiality agreements that we’ve signed with receivers,” he said.

What we’re finding now is that clients are far more interested in the financial standing of the companies that they are looking to do business with Carl Fergusson, Colas UK

When asked whether Colas might fall into the trap of bidding for a raft of low-price contracts like those said to have exacerbated Carillion’s problems, Mr Fergusson insisted his company was focused on value over volume.

“What we’re finding now is that clients are far more interested in the financial standing of the companies that they are looking to do business with.

“So that’s really where we think we’ve got (an advantage).

“It’s a significant component of our offer when we’ve got the backing of a 12 billion (euro) a year company with a very, very strong balance sheet. It’s definitely a strong part of our story.”

Colas recently scored a UK Government-backed project to build a new international airport in Uganda, which has been funded though a UK Export Finance Loan.

The firm now hopes its UK Projects division will clinch string of domestic deals, including an upcoming tender for a UK highways project.

Mr Fergusson refused to give further details but said the company has been in regular contact with the UK Government, which was “becoming more commercial” in its approach to business and was welcoming foreign investment in light of Brexit.

Colas UK – which employs around 1,500 people – currently logs around £300 million in annual revenues, against the larger company’s £11.7 billion consolidated sales.

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