SINGAPORE - The construction firm will invest $6.4 million, through its wholly-owned subsidiary Robin Village International, into a joint venture with Geostr Corporation and Marubeni-Itochu Steel (MISP), the Singapore subsidiary of the Japanese firm.
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Here is the statement from Tiong Seng Holdings:
Robin Village International (Pte) Ltd, the wholly-owned subsidiary of Mainboard-listed construction group and property developer, Tiong Seng Holdings Limited, today announced that it is entering into a Joint Venture Agreement (JVA) with Geostr Corporation and Marubeni-Itochu Steel Pte Ltd (MISP) to manufacture and supply precast tunnel segments to the Singapore and Malaysia markets.
Established since 1970, Geostr is the consolidated subsidiary of Nippon Steel & Sumitomo Metal Corporation and is the market leader in segment products for precast tunnels in Japan, accounting for more than 40 per cent of total production volume in the country. The company also holds the largest market share in production of concrete sheet pile, supplying more than 90 per cent of the total production volume in Japan.
MISP is the Singapore subsidiary of Marubeni-Itochu Steel Inc, a Japanese steel trading company based in Tokyo, which specialises in providing business management expertise in addition to its extensive distribution network.
Under the terms of the JVA, Tiong Seng, Geostr and MISP will establish a 44:51:5 joint venture entity to produce and distribute precast tunnel segments for both the Singapore and Malaysia markets. The total investment by the joint venture company is expected to be $14.5 million. The joint venture company will set up their manufacturing facility on the premises of Robin Village's existing precast plant in Iskandar, Malaysia.
Commenting on the joint venture, Pek Lian Guan, CEO of Tiong Seng Holdings Limited said, "We are pleased and extremely privileged to be Geostr's first business partner outside of Japan. This collaboration resonates well with our push for regional expansion. In our continuous drive for improved productivity and construction technology, we strive to harness Geostr's expertise and market leadership in precast tunnel segments to complement our existing suite of precast capabilities. "
Based on the estimates by the Building and Construction Authority (BCA) published on January 9, 2014, public sector projects such as institutional and civil engineering construction works are expected to reach $19-22 billion for 20141.
In addition, the Ministry of Transport expects to double the length of Singapore's rail network to 278 km from 138 km in 2008 at a cost of $60 billion over the next decade. The proposed expansion of the MRT network will boost the construction industry over the next five years, including support industries such as the precast tunnel segment.
The Group was recently awarded an $316 million joint venture contract by the Land Transport Authority for the construction of Great World Station and tunnels for the Thomson Line which updates its order book to $1.27 billion as at May 31, 2014 stretching to 2020.
Mr Pek added, "With the announcement of the MRT masterplan and the expanding infrastructure development in Malaysia, we believe this is a viable investment opportunity for us to grow our business. Supported by the growing demand for precast solutions in both the private and public sector, we are optimistic that this joint venture will improve our outreach to the construction industry, in particular the precast tunnel segment industry. This will position us favourably as we target the growing pipeline of MRT projects and infrastructure construction in Singapore and Malaysia."