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