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Italy's largest contractor sets sight on UK infrastructure

Exclusive: Italy’s largest contractor Salini Impregilo will bid for HS2 and water infrastructure projects in the coming years as part of a push to grow its UK and European presence, according to chief executive Pietro Salini.

Having overseen last year’s successful merger of Salini and Impregilo to create a worldwide firm with revenue of more than £3bn, Mr Salini has set his sights on international expansion.

He has set an ambitious revenue target of £5.5bn, with UK infrastructure projects likely to be a significant part of the mix.

Salini Impregilo currently operates in more than 50 countries and is interested in major infrastructure projects such as HS2 and the water sector.

Just under half (46 per cent) of Salini’s 2013 construction work was in rail and subways. Around a third of work was in Italy, with a further 10 per cent in the rest of Europe. Despite its limited visibility in the UK to date, the contractor looks set to increase its presence here.

It is already understood to be holding meetings with other contractors to discuss potential joint ventures for HS2.

As separate companies, Salini and Impregilo had expressed interest in construction work on London’s ‘super sewer’, the Thames Tideway tunnel, but neither were among the shortlisted contractors revealed late in 2013.

However, the UK’s significant infrastructure pipeline still appeals to the beefed-up merged firm.

It has already built more than 340 km of underground lines worldwide, having been appointed to work on metros including those in Doha, Milan, Riyadh and San Francisco.

With lucrative projects up for grabs on Crossrail 2 and HS2, and potentially HS3 to come, that expertise could see it break into the UK rail and infrastructure markets as a major player.

Mr Salini said: “We have UK concessions in [for example] hospitals. It’s not a primary market but we have the intention to grow in the UK. There are large projects coming out, in water especially and we feel we have good ideas.

“[Will we try and win work on HS2] of course. We try to be global in sectors, we look at the size of a project and its dimensions for us to be interested in submitting a bid.

“The major problem we face in Europe is to find a significant amount of projects of a size which are interesting.”

Mr Salini told Construction News he had looked into listing on the London Stock Exchange but has now opted against a UK flotation, despite the importance of the city as a financial centre.

“It’s such an important place to be,” he said. “We’re there almost every week. It would be nice to be there permanently to do business in a better way, but being listed in two countries is practically impossible.

“Dual listing is very demanding and there are different rules working against each other.

“We examined the possibility [but] it was discarded because it was impossible.”

The company would consider joint ventures and acquisitions in the UK, Mr Salini added, but he admitted that its current focus was on “fine tuning our [combined] organisation to establish a single culture”.

In the first nine months of 2014, the group reported total revenue of around £2.35bn, up 7 per cent on the same period the year before.

Australia and the US have now been earmarked as the two regions most primed for growth for Salini Impregilo.

“We are expanding fast in Australia, the Middle East and Europe,” Mr Salini said. “The country I would like to have a larger footprint in now is the US; we’re investing in making that process go quicker.

“Also in Australia, there is an enormous boom in infrastructure. The US is made of a number of different states with different infrastructure needs, but in Australia we think we have a bright future.”

Closer to home, the company can still increase its market share in Europe, according to its CEO. It announced last month the award of a contract worth around £105m to design and build a 14.4 km section of the S3 Expressway in western Poland, close to Wroclaw.

“In November its joint venture (in which it has an 85 per cent stake) with Turkish firm NTF won the £200m contract for civil works on the Cetin main hydroelectric plant on the Botan river in south-eastern Turkey.

“We are so small in the European market that we still have enormous possibility to grow even if the market shrinks,” Mr Salini explained.

“We have more possibilities for expansion in Europe. Our footprint, making globally £4.5bn of turnover is insignificant in comparison to the dimensions of the European market.”

The group’s exposure to multiple currencies and markets around the world will help protect the firm from depressed economies, he insisted, dulling any potential fears over stuttering Eurozone growth in G8 nations Germany and France.

“Being in 55 countries, you’re exposed to recession in some countries but in others it’s non-existent. Our specialty in heavy civil engineering is not cyclical. It’s important to understand there is a big difference in exposure to construction of real estate, where it’s very cyclical.”

Mr Salini also stressed the firm had strong recruitment plans and urged UK workers to join Salini Impregilo to “work on the most attractive projects around the world”.

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