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Matthew Cranston

Mark Webber had secured the second pole position at the Australian Grand Prix. The crowd was cheering. The fanfare was spectacular. Major sponsor UBS had invited one of its largest Australian private clients, property tycoon Kevin Seymour, along for the thrilling ride.

But sitting up in the corporate box with his daughter Leigh, the 73-year-old former NSW golf champion had other things on his mind. Seymour was seriously thinking about selling out of Watpac, the listed construction group he had saved from the brink in 1996 and rebuilt into a significant national player.

Six weeks before, Seymour had received an intriguing call from the Middle East. After the Grand Prix, he and his daughter boarded the next Emirates flight, first class, to Dubai. There, he met Johan Beerlandt, chief executive of Besix, Belgium’s largest construction company and the co-builder of the world’s tallest tower, Burj Khalifa.

“Why don’t we meet halfway? You come from Belgium, and I come from Australia, and we can catch up in Dubai,” Seymour had told Beerlandt when a meeting was proposed.

Arriving refreshed, Seymour – whose wealth is estimated by the BRW Rich List at more than $550 million and who boasts Gina Rinehart as a business partner – toured some Besix projects in Dubai, including the Burj Khalifa. After negotiating with Beerlandt, he kicked back with Queensland casualness at the One & Only chain’s Royal Mirage at Dubai’s Jumeirah Beach, waiting for confirmation of a deal.

Ultimately, they agreed on the sale of Seymour’s 15 per cent stake in Watpac for $20 million and on a long-term joint venture between the two companies in Australia.

Besix, advised by Macquarie Capital executive director Dominic Meagher, had themselves a pretty attractive proposal. They purchased Seymour’s 15 per cent stake, along with a separate 0.6 per cent stake, at 70¢ – a substantial discount to Watpac’s last stated net tangible assets per security of $1.17. Not only that, as part of the arrangement Besix would receive two seats at the Watpac board table – one immediately and one when Seymour finally steps down as a director in September this year. Watpac was clearly the best deal out of a catalogue of more than 70 companies Besix had originally looked at in Australia. Two made the final shortlist and Watpac was the first, and only, to be engaged.

Building blocks


The process started in May 2012, when Besix approached Macquarie Capital with a tentative thesis about owning a platform to build a major construction workbook in Australia. Besix, which does most of its work in the Middle East, had been advised by Macquarie in Europe on numerous public-private partnerships. By the middle of last year, Besix formally appointed Macquarie to advise it on which Australian company – listed or unlisted – it would take a stake in.

By August, Meagher and his team had prepared a detailed report on the state of play in the Australian construction sector – the players and their capabilities, the structure and the major themes. There was plenty to report, with several construction companies, including Kell & Rigby and St Hilliers Construction, collapsing and write-downs everywhere in the sector. There were bargain entry points to choose from but plenty of risks to assess as well. More than 70 companies were chiselled down to 20, then in October a final five were selected. (Leighton Holdings was not one of them – it was far too big for Besix to take a bite.)





When Belgium’s Crown Prince Philippe visited Australia in November last year, Beerlandt, along with his chief financial officer and head of strategy, joined compatriots in the prince’s courtly entourage. As the prince was flying home, Beerlandt flew to Brisbane and met Macquarie at its Central Plaza One office in Brisbane. At the meeting, Watpac was one of two companies that stood out. Beerlandt mulled over his decision during the Christmas holidays.

Meagher had given Watpac chief executive Martin Monro some idea that an offshore group saw it as a potential suitor. On January 30, when Monro had been running late all morning, he received a phone call from Beerlandt. “We have had a look at you,” Beerlandt announced. “Can you meet us today?”

Monro didn’t think too much of it at first. But half an hour after sitting down, he realised Besix had been looking at Watpac very closely. Shares in the Brisbane-based construction company had dropped more than 30 per cent in the 12 months before Beerlandt made that phone call. There was clearly some nervousness within the company, which had made a provision for a $90 million impairment on its development property portfolio in May 2012.

A few weeks passed. Monro had Australian general manager of Besix, Carlo Schreurs, around for roast lamb at his Clayfield home in Brisbane. ­­The?dinner went well. A reciprocal box of Belgian chocolates was delivered the next day.

Logical entry point


Seymour’s stake had been decided as the most logical entry point into the company for Besix.

After resigning as chairman of Watpac just over a year beforehand, it was clear that Seymour would be open to offers. Movement from Seymour was seen as far back as October 2011 when he launched a tirade against the federal government’s “two strikes” policy on remuneration. “If that means at the end of next year I get turfed as a director as a result of this ‘two strikes and you are out’ policy, then I am quite happy to do that,” he told fellow shareholders after the company had its “first strike” on executive pay.

But Seymour was clear any exit strategy must not hurt Watpac.

The memorandum of understanding between the two companies was a positive announcement, allaying any of Seymour’s concerns.

Despite providing hospitality for Seymour at the Grand Prix, UBS was absent as an adviser on his deal with Watpac.

But with $20 million in the bank as a result of the sale, Seymour was spotted in Brisbane this week talking to a UBS private client adviser.

It was also a coincidence that on the very day Besix’s investment and joint-venture arrangement was announced, Watpac’s partner on the $65 million Port Macquarie Base Hospital project in New South Wales, National Buildplan Group, was placed into voluntary administration.

Timing is everything.