Infrastructure portfolio: turnaround and structural options
PROPERTY, INFRASTRUCTURE & CONSTRUCTION · CORPORATE STRATEGY · RESTRUCTURING
The situation
A major ASX-listed property and infrastructure group faced a performance crisis in its civil engineering and asset-services unit. Despite a strong infrastructure market, the division carried project write-downs, margin leakage on high-risk single-stage design-and-construct mega-projects, and heavy corporate overhead. EBITDA had fallen to negative 21.7 per cent, and the division's cost base no longer matched its forward pipeline, creating earnings volatility that reached into the parent's property model. The board wanted a review that would test whether the division was viable inside the group, de-risk the pipeline, and produce implementation-ready plans for either a turnaround or a separation.
The work
Retained as lead corporate-strategy adviser, we ran a structural diagnostic across the portfolio and built a board-level decision framework around three mutually exclusive pathways:
A go-forward turnaround that kept the division in the group: an immediate freeze on single-stage and mega-project bids above one billion dollars for twenty-four months, a shift of complex brownfield work to alliance and construct-only models, and a central origination function to hold risk boundaries.
An asset carve-out that sold the lower-margin civil-contracting lines and kept a lean engineering unit inside the group, acting as a technical advisory house to protect the parent's urban-regeneration and transit-oriented developments.
A de-merger that spun the plant, equipment, and workforce into a standalone tier-two contractor, rebalancing the cost base from fixed to variable and opening markets in resources, marine, and dams that the parent's risk profile had kept closed.
Within the go-forward option we designed the detail: a five-tier talent model to rebuild delivery leadership, an overhead reset that took $31 million out within three years (from $120.7 million to $95.4 million), and a three-horizon plan moving from refocus, to integration at a four to five per cent EBITDA benchmark, to expansion into gateway cities including London and New York.
The outcome
A board-ready options report with capability gaps, capital requirements, and timelines across a five-year outlook.
Objective criteria to remove the most damaging contract exposures and return margins toward a four to five per cent EBITDA benchmark.
The operational modelling the executive and its financiers needed to commit to capital reallocation and a possible separation.