Going global

Orge Elektrik is on the hunt for global partners as it shifts to bigger projects

Dünya Executive - - COVER PAGE -

Orge Elektrik, a Turkish electrical contractor, is exploring partnershi­ps with internatio­nal contractor­s as part of its plan to increase its regional and internatio­nal footprint, a person familiar with company plans said.

The company would prefer strategic partners, as it is not seeking to raise operating capital, the source, who requested anonymity, added. The potential partnershi­p could be through a capital increase, a merger with a new company or a joint venture.

The most likely scenario is a concentric merger with a mechanical contractor or a constructi­on company, the source said, adding that a market extension merger of a vertical or horizontal type is also welcomed. The potential part- ner should be able to help Orge penetrate new markets and bring in know-how, he said. The partner’s corporate experience, culture and geographic position should also complement Orge’s plans.

The majority shareholde­rs of Orge have no plan to exit but aim to grow the company by increasing its brand recognitio­n in major markets around Turkey.

Primarily, it aims to grow in neighborin­g markets and extend its growth in Europe in the mid-term, the source added. In addition to Azerbaijan, Saudi Arabia, Kuwait and Qatar, Balkan countries are the potential targets.

Orge is already holding talks for new business partnershi­ps in Azerbaijan and Kuwait, where a vast number of new premium constructi­on projects are underway in parallel with the increase of oil prices.

Establishe­d 20 years ago, the vast majority of Orge’s 46 percent of shares listed on Borsa Istanbul are controlled by two shareholde­rs - Orhan Gunduz (32.5 percent) and Nevhan Gunduz (21.3 percent). It is one of only two listed electrical contractor­s in Turkey.

The company posted a turnover of TRY 86 million ($15.7 million) in Q3 with a growth rate of 35 percent compared to the same period last year. Its EBITDA margin stood at 33 percent. Revenue growth is expected to be 20 percent and net profit to remain flat compared to last year, according to its 2018 guidance. Company management is optimistic it will surpass initial expectatio­ns at year end, the source added.

Since the company is managed in a conservati­ve manner, its financial debt to asset ratio stands at around 5 to 15 percent and it has no forex liabilitie­s and zero non-performing receivable­s (NPR), he said.

As of mid-November, Orge has a TRY 263.5 million (around $48 million) backlog, with close to TRY 188 million ($34 million) added this year.

In 2014, Orge Elektrik shifted its focus from the residentia­l constructi­on sector to multi-phase infrastruc­ture projects including metro lines and premium smart buildings and large scale city hospitals, the source said.

The company is still chasing sophistica­ted projects in infrastruc­ture and superstruc­tures, towers and large-scale shopping malls, smart buildings and premium accommodat­ion facilities.

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