Is infrastructure demand stealing tradies from housing? This CEO says yes

Joe Bartolo has ridden the wave of insatiable government appetites for major infrastructure projects.

Symal, the civil construction company he founded more than two decades ago, has worked on Snowy Hydro, helped remove level crossings in Melbourne and built flood relief centres after the 2022 disasters.

But even Bartolo thinks that diverting tradies from building much-needed homes to help governments (in all tiers) deliver on infrastructure agendas has caused problems.

Symal’s Ray Dando, Andrew Fairbairn and Joe Bartolo ring the famed ASX bell. Credit: Dion Georgopoulos

“I feel there was a bit too much everyone was trying to deliver at once, and if it is spread out a little bit more, it would have been much easier to deliver with the skilled people,” Bartolo says.

“There’s definitely been a correction to the industry, and in a way, almost a welcome correction to some extent.”

Australia is in the middle of a housing crisis, and the federal government is already struggling to deliver on its promise of building 1.2 million new homes by 2029 to keep pace with population growth.

Many factors are slowing the process – including planning restrictions and the cost of building – but in September, the NSW Productivity Commission called on governments to stop spending money on infrastructure to enable the building of more homes.

“A major reason the construction sector is struggling to deliver homes across Australia is because governments are diverting resources from home building to public infrastructure projects,” its report said.

Bartolo says about three-quarters of Symal’s revenue comes from the private sector, so he doesn’t believe it will be affected by any significant changes to governments’ infrastructure agendas.

The Melbourne-based founder and managing director was in Sydney last week, standing in the Exchange Sector to ring the famed bell, marking the debut listing of his business.

Symal began trading on the ASX on Thursday, under the SYL ticket, with a $437 million market capitalisation, after raising $136 million from institutional and retail investors at $1.85 a share.

“For us, listing was about growth, it was about legacy and creating something that we never want to lose,” Bartolo says. “Being listed lets us continue on that journey, continue to grow and outlive us.”

It has become one of only about 20 companies floated on the stock exchange so far in 2024, but hopes are rising that a three-year drought in initial public offerings is finally nearing an end as the Australian market rides the wave of a strong Wall Street and awaits cuts to the cash rate next year.

Bartolo cites the performance of Guzman y Gomez, which listed in June, as evidence that this was the right time for his business to float on the ASX.

“There was also a lack of construction or material supply businesses in the IPO market as well, so we felt that we could really fill that void that was there, but in addition, we still own 70 per cent of the business, so for us it didn’t really matter what the outcome was in terms of valuation because we didn’t get the benefit upside anyway,” he says.

“The timing was perfect in terms of work flow as well … somebody needs to do something to open the market back. If you continue to wait, there was always that question, ‘could we be the first ones that spark it, and we get the benefit of that as well?’”

It has been a challenging time for Australia’s IPOs, which is at the weakest pace in 15 years, amid elevated global inflation (which has just started easing) and high-interest rates dampening economic sentiment, as well as companies finding it easier than ever to gain private credit. The US, Britain and Canada are also experiencing low listing numbers since peaking in 2021.

EY capital markets leader Paul Murphy says there were signs of market stability in the second half of this year, with a number of IPO candidates dusting off prospectuses. Up to a dozen companies are expected to float on the ASX over the next six weeks.

“We do expect to see investor sentiment improve, subject to the geopolitical situation and better macroeconomic conditions, with lower inflation and potentially the beginning of easing of monetary policy, which should create the right conditions for business growth, consumer demand and stable cost inflation,” Murphy said.

Joe Bartolo wonders “could Symal be the first ones to spark” a flurry of listings. Credit: Dion Georgopoulos

“This will perhaps benefit a number of sectors and IPOs of smaller businesses.”

Symal, which has about 1000 employees, generated $770 million in revenue and recorded net profit of $33 million in the 2024 financial year, according to its prospectus. It has $1.3 billion of work-in-hand, with 90 per cent of that from existing clients, on 200 projects.

A quarter of the group’s revenue is from the public sector, including government departments and agencies at the three levels of government. Current projects include upgrades to Eastern Freeway in Melbourne’s east and a gas power plant in Kurri Kurri, NSW.

Bartolo credits the rise of his company to Andrew Fairburn and Ray Dando, the directors of strategy, growth and delivery, who joined him 15 years ago. Fairburn and Dando own 15 per cent of Symal shares, while Bartolo is the largest shareholder with 30 per cent.

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