J.P. Morgan real assets fund exits China's Goldtrust Water
China Water Affairs Group, a Hong Kong-listed integrated water service provider, has agreed to acquire Goldtrust Water Holdings for $109.71 million, facilitating an exit for J.P. Morgan’s real assets fund.
China Water Affairs is acquiring all shares in Goldtrust Water held by J.P. Morgan's Asian Infrastructure & Related Resources Opportunity (AIRRO) Fund and by an individual shareholder, according to a filing. The sum includes $17.85 million for Goldtrust Water's 9.7% stake in Shenzhen Bus Group, a public bus transportation services provider.
Goldtrust currently operates 15 waste water treatment projects in various provinces in China, including Guangdong, Shaanxi, Shandong and Jiangsu. The firm's net profit jumped from RMB21.51 million ($3.47 million) in 2013 to RMB25.43 million last year. J.P. Morgan's AIRRO Fund invested an undisclosed sum in the company in 2010.
The acquisition will increase China Water Affairs' overall daily water supply and sewage treatment capacity by 650,000 tons to 6.07 million tons. The company is involved in urban water supply, water supply systems management, meter installation and other related services, operating in over 30 Chinese cities.
In 2011, Japanese financial services group Orix Corp. acquired a 14.53% stake of China Water Affairs, according to AVCJ Research.
The State Council said in April last year that China will further open up the utility franchise sector to private capital, following the public-private partnership (PPP) guideline issued earlier.
"To develop infrastructure and utilities through franchising' will be one of the ‘twin engines' of China's economic development. Furthermore, the newly issued ‘Water Ten' by the State Council also puts an emphasis on the speeding up of the water tariff reform in China, as it targeted to fully implement the progressive water tariff system by 2015, giving full play to the market mechanism," Chuanliang Duan, chairman of China Water Affairs, said in a statement.
J.P. Morgan's AIRRO fund closed in February 2010 at $858.6 million. It targets toll roads and other transportation assets, power generation, electricity transmission and distribution facilities, water supply and waste management, and social infrastructure facilities in the healthcare and education areas.
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