The collapse into administration of Probuild (see earlier post), it turns out, has a China angle.
Just over a year ago, treasurer Josh Frydenberg intervened to say he would block a planned takeover of the local unit of the South African-owned WBHO builder, citing national security grounds, the AFR reported at the time.
The suitor China State Construction Engineering Corp (who, as the name implies, is state-owned) had been offering to pay $300m for the troubled operations. WBHO cited that rejection as one of the reasons for pulling the pin on the Australian operations:
“During 2020, the Company entered into negotiations with a third party to sell the Probuild business, this transaction was progressed to agreed terms by December 2020 but approval from the Australian Foreign Investment Review Board was not obtained.
“Following on from this, WBHO implemented its strategy to downsize the business, and considered other sales options which proved fruitless due to concerns potential acquirers had as to the impact of the regulatory approach to Covid.”
As the AFR reported in January 2021, Probuild’s executive chairman Simon Gray, who was also a part owner of the Australian unit, wasn’t happy with the decision. (He “slammed” it, apparently.)
Gray noted that Probuild was less exposed to significant work, like tunnels and airports, than John Holland, which was bought by the China Communications Construction Company for $1bn in 2015, the paper said.
It does make you wonder whether John Holland might take on a Port of Darwin flavour (leased to a Chinese company for 99 years), with questions raised about whether nefarious China string-pulling, etc, might be a risk. Perhaps Australian voters could ask for some consistency.
Both Gray and Frydenberg have been approached for comment.
In the meantime, it’s worth noting South African shareholders weren’t very impressed by the Probuild fiasco, sending WBHO’s shares down a tidy 27% yesterday, according to Bloomberg.