China-backed construction giant sizes up $200m Probuild takeover bid

A Chinese-government controlled conglomerate has lobbed a $200m takeover bid for Probuild, one of Australia’s largest builders.

Probuild Construction cranes working on West Side Place on 250 Spencer Street in the Melbourne CBD, Victoria. Picture: David Caird

A Chinese-government controlled conglomerate has lobbed a $200m takeover bid for Probuild, one of Australia’s largest builders, in a deal now under Foreign Investment Review Board scrutiny.

The bid for Probuild, which is largely owned by South African interests and has the contract to build the new Melbourne headquarters for pharmaceutical firm CSL, comes at a time of heightened tensions between Beijing and Canberra.

The proposed purchase of Probuild by China State Construction Engineering Corporation, confirmed by two highly placed industry sources on Sunday, would need the approval of both FIRB and Treasurer Josh Frydenberg.

The Chinese state-owned builder is the largest construction company in the world and has been active in Australia in the past.

The Australian’s DataRoom column first reported CSCEC’s interest in Probuild — one of a small number of national tier-1 construction companies alongside Lendlease and Multiplex — in June.

But it is being assessed at a time of strained tensions between Australia and China.

Last week, a leaked document from the Chinese Embassy in Canberra referred to 14 grievances Beijing had. The first was having deals blocked on “opaque” national security grounds.

One group of Chinese investors at the weekend withdrew an $80m bid to purchase an eight-storey office tower in Sydney’s Chinatown after failing to hear back from the FIRB for two months after a decision was due.

“The property is a generic commercial office investment with no sensitivities that I am aware of … I am at a loss as to why the FIRB has not responded after eight months,” Colliers International director Vince Kernahan told the South China Morning Post.

Earlier this month Woodside Petroleum said Chinese players were forced to pull out of the sale of its stake in the $16bn Scarborough gas project in Western Australia, while Mr Frydenberg in August decided against the proposed $600m purchase of Lion Dairy by a company part-owned by Chinese government interests. Mr Frydenberg on Sunday declined to comment on the CSCEC bid for Probuild.

Probuild had an annual turnover of more than $2bn and a project book of about $5bn, including Aurora Melbourne Central, the city’s tallest apartment.

Probuild’s parent, South African infrastructure contractor WBHO, said in late October a proposal from a “major international construction and civil services company” to acquire its 88 per cent interest was “well progressed”. The company said the transaction remained subject to counterparty, regulatory and shareholder approvals.

Luke Stambolis, Probuild’s managing director, said on Sunday that it was “business as usual”.