Lendlease’s European construction arm is on the fast track to being sold, underlining a strategic shift by the parent company to concentrate efforts in Australia.
- Simon Gorski, head of Lendlease Europe, is accelerating plans to secure a buyer by the end of the year, despite an initial timeline extending to 2025.
- The company’s latest accounts show a significant decrease in profits, yet an attractive project pipeline remains, making it a valuable acquisition.
- Despite challenges in the contracting industry, Gorski remains optimistic about future opportunities in the UK construction sector.
- Various acquisition models are being considered, with Gorski prioritising a direct sale while keeping his options open.
As Lendlease embarks on the divestment of its UK and US contracting businesses, Simon Gorski, head of Lendlease Europe, is notably expediting the process. Initially slated for completion by the end of 2025, Gorski’s ambition is to finalise the sale by the end of this year. He emphasises a proactive approach, stating that a team is already “working to fairly aggressive timelines” to eliminate uncertainties.
Despite a 37% drop in pre-tax profits to £11.9m and a revenue decline from £553.5m to £509m for the year ending June 2023, Lendlease Europe boasts £2.3bn of external work “at the preferred bidder stage,” with portions having already materialised. Gorski identifies this pipeline as an “enviable” asset, underscoring the firm’s growth potential.
Speculation about potential buyers is rife, although Gorski refrains from commenting on interested parties. “The number isn’t getting smaller,” he mentions, indicating burgeoning interest, albeit without formal engagements at present. Market insiders speculate that tier-one contractors may not pursue the acquisition due to their preference for organic growth.
Financial sector insights suggest that conventional low margins in contracting could deter private equity interest, though Gorski has not dismissed the possibility of varied acquisition models, including a management buyout or an employee-owned structure. However, he asserts that any model chosen must align with the interests of clients, staff, and the Lendlease group.
A failed legal endeavour to recover sums on a Leeds hospital PFI project contributed to the profit downturn, an issue Gorski considers resolved. Further, the company’s strategic focus remains unmarred by historic liabilities concerning UK fire safety, with ongoing clarity expected towards the year-end.
In an ever-evolving sector marked by 4,401 construction firm insolvencies by April 2024, Gorski envisions potential in upcoming public sector projects amidst upcoming elections. He foresees increased capital expenditure in healthcare, defence, and infrastructure, bolstered by anticipated interest rate cuts potentially catalysing private sector initiatives.
Lendlease’s strategic reorientation reflects a proactive push towards realising new growth opportunities amidst evolving market dynamics.
