Assystem Betting on Long-Term with Acquisition in India

/ March 8, 2021/ Assystem, India, Infrastructure Engineering, M&As (small under $50m in revenues)

Assystem Acquires STUP, a Transport Infra Engineering Specialist

Assystem is betting on the long-term with its 99% acquisition of an engineering firm based in India, STUP Consultants. STUP is headquartered in Mumbai, had revenues of approximately EUR 20m and a headcount of 1.1k. It provides transport infrastructure engineering services, mostly around highways, railways, metros, and airports. The company is also present in water treatment and energy engineering.

STUP Is A Long-Term Investment

Looking at the details, Assystem wants to replicate what it did with Radicon in KSA. The company has acquired an infrastructure engineering firm, targeting both the local infra and nuclear engineering opportunities.

With STUP, Assystem eyes the USD 1.4tn National Infrastructure Pipeline (NIP) program. NIP is a long-term opportunity, with Assystem expecting the Indian government expecting to launch tenders by the mid-20s. The program suffers from a lack of funding from the government. NIP will not be a smooth ride for STUP or competitors. Still, the long-term potential is huge, in line with Assystem’s investment cycle.

In a move similar to Radicon in KSA, Assystem also targets the mid-term nuclear plant engineering market. India has signed agreements with different suppliers, including Rosatom (Russia) and Framatome (France) to construct power plants. However, it has not finalized the contracts. With nuclear plants being long-term investments, the Indian nuclear engineering opportunity, although real, will not materialize any time soon. Nevertheless, Assystem is getting prepared for the opportunity and will set up a nuclear engineering CoE in the country.

Assystem To Use STUP for Infrastructure Offshoring

Finally, Assystem hopes to build an infrastructure engineering offshore basis in India, targeting non-nuclear infrastructure engineering opportunities. We think offshoring offers more growth potential in the mid-term than the local infrastructure and nuclear engineering. Now, this is truly exciting and offers high-growth prospects. Assystem only needs to execute!

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