CLSA invests in China’s Scinor Water

The capital will be used to expand manufacturing capacity and develop new product lines. Scinor, which was founded by serial water entrepreneurs Hongmei Wu and Huoqi Chen, provides end-to-end solutions to industrial and municipal customers in wastewater treatment and seawater desalination. The company leverages ties with Chinese universities to conduct R&D on microfiltration and ultra-filtration membranes.

CLSA CP expects China's water membrane industry to triple in size to $13 billion, with Scinor well positioned to expand its share of the domestic and global markets.

"Water is one of our key focus areas given the acute issues we are seeing in Asia, but it remains a difficult area to invest in," said Peter Kennedy, a managing director at CLSA CP. "We believe Scinor will be an excellent stand-alone investment and its potential will be enhanced as part of our water ecosystem, which is already adding distribution capabilities outside the China market."

He added that Scinor is the first company the GP has collaborated with that offers world-class technology plus a management team with a deep understanding of the industry and a proven track record.

The investment was channeled through CLSA CP's Clean Resources Asia Growth Fund, a 2009 vintage vehicle with a fundraising target of $200 million. International Finance Corporation (IFC) and the Asian Development Bank contributed to the $70 million first close in late 2009. It invests in sustainable agriculture, cleaner energy, recycling and energy efficiency, in addition to water.

The fund previously participated in two rounds of financing for Aqualyng, which provides desalination solutions based on reversed osmosis technology. The company sold a 50% stake in its Chinese subsidiary to Beijing Enterprises Water Group.

Several private equity firms have committed capital to China-focused water treatment specialists, although most deals tend to be early stage. According to AVCJ Research, PE investment in sewage treatment and waste water management came to $159 million in 2012, with two thirds of the capital going to sewage treatment firms.

In January, KKR agreed to invest another $40 million in United Envirotech, having previously subscribed to $113.8 million in convertible bonds issued by the company. Three months earlier, China Renaissance Capital Investment (CRCI) exited its holding in Grant Achieve Global to Olympus Capital.

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• Topics
• Cleantech
• Greater China
• Expansion
• CLSA Capital Partners
• Cleantech
• Growth capital
• KPCB China Management