Syndney, Beijing: China Communications Construction Company is buying John Holland, one of Australia’s biggest builders, in a deal that gives the state-owned enterprise a foothold in a country spending tens of billions of dollars building new road and rail projects.

A subsidiary of CCCC has agreed a deal with Leighton Holdings, the parent company of John Holland, to buy the building and engineering company for an enterprise value of A$1.15 billion ($950 million). “Following a comprehensive and extensive global sale process we have achieved a fair value for John Holland that reflects its position as one of the country’s leading engineering and construction companies,” said Leighton.

CCCC is the fourth-largest construction company in the world with a market capitalisation of A$23.5 billion, and is traded on the Hong Kong and Shanghai stock exchanges. Its proposed takeover of John Holland is conditional on approval by Australia’s Foreign Investment Review Board, and would represent the biggest investment by a Chinese construction company in Australia to date.

Last month Australia and China announced plans to sign a bilateral trade agreement between the countries in a sign of ever closer economic ties. Joe Hockey, Australia’s treasurer, has said the country was open to Chinese investment as it prepared to sell A$100 billion in state assets to fund a A$50 billion state programme to build new roads, rail and ports over six years.

Until now most Chinese investment in Australia has been directed towards the mining and resources sector but there is growing interest from Chinese companies in other sectors such as energy, agriculture and property. “It is likely that acquiring John Holland would provide CCCC with new technology and skills,” said Jeffrey Wilson, a fellow at the Asian research centre at Murdoch University. “It would also help to have a local subsidiary when they tender for Australian government contracts.

China’s investment in Australia has increased tenfold since 2005 and totals $57.2 billion annually, making the it the largest destination for Chinese investment after the US.

But with Australia’s mining investment boom tapering off, the value of Chinese investment in the country fell 10 per cent to $9.15 billion last year, even as overall overseas investment from China increased by 16 per cent to $90.1 billion, according to KPMG.

CCCC said the deal represented “significant progress” in its international development strategy. “There is a strong pipeline of social infrastructure projects planned in Australia and [CCCC] intends to support [Leighton], financially and technically, to bid for and deliver world-class infrastructure projects,” it said.

Last month President Xi Jinping predicted that Chinese offshore investment would reach $1.25 trillion over the next decade. Beijing has prioritised building investment and infrastructure links across central Asia and the Asia-Pacific region.

Leighton said the deal would reduce its gearing by 10 percentage points and cut annual revenues by A$3.7 billion and work-in-hand by A$5.4 billion.

About 4,100 John Holland employees will transfer to CCCC International Holding Limited, a subsidiary of CCCC. John Holland is the third-biggest division of Leighton and made-revenues of A$4.75 billion in 2013.

— Financial Times