UK infrastructure updates
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Laing O’Rourke, the UK’s largest privately owned construction group, is planning a listing within three years as the industry is set to burst out of a decade of austerity into a post-pandemic infrastructure boom.
Founder and chief executive Ray O’Rourke told the Financial Times that the Dartford-based company was working on finding his successor, after which time it would likely float on the public markets.
“We will float the company in a few years’ time,” he said. “By 2024 we will be in good shape.”
The 74-year-old Irishman founded the company in 1978 with an initial £2,500 project before expanding and transforming from a specialist into a large, generalised engineering company when it bought Laing Construction from John Laing in 2001. It has been privately held throughout.
If the company picked London for the listing, it would join large competitors such as Balfour Beatty, Kier and Morgan Sindall, and bring cheer to the city’s stock market, which has been shrinking faster than other European exchanges.
The group has provided engineering services to UK infrastructure projects including Hinkley Point nuclear power station, Heathrow Terminal 5 and the Crossrail and HS2 railways. It also has a base in Australia, which it mooted exiting in 2016 but reversed course and refinanced the business.
O’Rourke said it might not do a listing in “the traditional way”, but did not provide details.
“People are now saying the day of the big investment banker putting it together may have to be done differently. There’s a great opportunity to innovate around this,” he said.
Along with other construction companies, Laing O’Rourke suffered a difficult decade following the global financial crisis in 2008.
The company made a £45.5m pre-tax profit in its 2020 financial year on revenues of £2.4bn, after suffering a loss of nearly £220m four years earlier.
The outlook is far brighter with Boris Johnson’s government announcing last year that it would spend £600bn on infrastructure over five years.
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To reduce labour costs and shorten construction times, Laing O’Rourke is a longtime advocate of off-site manufacturing, which involves building large sections for construction projects in factories and bringing them to sites.
“Our industry is in the dark ages,” said O’Rourke. “That is where the future of our industry will be.” He believed his company was 85 per cent of the way to making off-site manufacturing work.
However, he said the UK construction industry was hampered by the rapid-fire succession of ministers in charge of construction but that the aftermath of Brexit and the pandemic presented an opportunity for change.
“Democracy is a very expensive pastime. If we get rid of some of the red tape then that would be very helpful,” he said. “I know China is totally different, but when you look at what they achieve in a short space of time, it takes us twice the time to get to the start point.”
He added: “I think if we had a more executive government and we were closer to the fire of industry then that would be helpful.”