The engineering company’s investment partnership is paying off.
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The Cimic Group Ltd (ASX: CIM) share price is climbing during late morning trade.
This follows the engineering company’s announcement that its 50%-owned subsidiary Ventia has been awarded a government contract.
At the time of writing, Cimic shares are fetching $19.88, up 0.51%.
Details of the contract
In today’s statement, Cimic advised that the South Australian government has selected Ventia for a facilities management contract.
The Across Government Facilities Management Arrangement (AGFMA) is focused on the maintenance, management and improvement of government-owned facilities. This includes building assets that underpin essential community services such as schools, hospitals, and police stations.
Ventia is expecting to receive roughly $300 million annual revenue from the deal. The AGFMA will run over an initial period of 5 years and 7 months, with potentially three 2-year extensions.
Transition activities for the contract are scheduled to begin in July with operations commencing in December this year.
Ventia group CEO Dean Banks touched on the award, saying:
South Australians rely on the essential services delivered at more than 3,500 Government locations across the state and Ventia is pleased to support the government of South Australia with the delivery of facility management services to the community, 7 days a week, 365 days a year.
Ventia’s group executive of defence and social infrastructure Derek Osborn added:
Ventia is looking forward to partnering with local small to medium businesses to help us deliver these services, keeping investment and employment in South Australia.
Ventia is also passionate about providing apprenticeships in various trades, as well as ensuring our employment opportunities focus on delivering a diverse and inclusive workforce.
More on Ventia and the Cimic share price
Ventia is a 50/50 investment partnership between Cimic and funds managed by affiliates of Apollo Global Management.
Ventia is a leading essential and infrastructure services provider in Australia and New Zealand, operating across 400 locations.
The subsidiary operates in a variety of sectors including transport, telecommunications, utilities, defence, water, energy, resources, and social infrastructure.
The Cimic share price has lost more than 15% over the last 12 months and is down 18% in 2021.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.