Connaught Environmental is one of two of Connaught’s divisions to survive the fallout from the collapse of the social housing division 10 days ago

The business has annual revenues of around £50m raised from maintaining infrastructure.

Paul Sheffield, Kier’s chief executive, confirmed he had met Connaught’s administrators, KPMG, last week and that Connaught Environmental “overlaps quite nicely with what we do”.

KPMG plans to sell the business along with Connaught Compliance which is also trading normally but has said it was not in a hurry to find a buyer.

The firm also said it is still in the market to secure social housing work should councils decide to retender former Connaught contracts.

The construction to house building group has built up record cash reserves of £175m over the year, which has stoked up speculation it is on the acquisition trail.

Also Kier has been reducing its cash exposure to private housing, selling off land reserves to build up cash for investment elsewhere.

One of its target markets is expanding the groups breadth of services offered to councils, which are increasingly looking to bundle all services into single contracts.

The firm said it was hopeful that civil engineering will prove a significant area of work in coming years as it aims to take a chunk of the £6bn expected to be spent by the energy sector in coming years.