PE-backed SIIC Environment makes China bolt-on acquisition

The three investors committed S$260.2 million ($209 million) to SIIC - a subsidiary of Hong Kong-listed Shanghai Industrial Holdings - in late 2013 with a view to supporting expansion of the business. The acquisition of Fudan Water will bring 10 projects with a planned water treatment capacity of over one million tons per day to the SIIC portfolio.

The seller is Global Environment, which will sell its subsidiary, Global Envirotech, to SIIC for approximately RMB1.1 billion, according to a regulatory filing. Global Envirotech holds a 92.15% stake in Fudan Water through Global HK. As part of the transaction, SIIC will pay off RMB480 million in debt owed by Global HK.

The RMB1.1 billion payment comprises RMB151.7 million in cash and 1.56 billion shares in Singapore-listed SIIC - or 13.99% of the company's enlarged share capital - at S$0.132 apiece. As a result, Shanghai Industrial's stake in SIIC will fall to 35.99% from 41.85%.

Fudan Water posted a net profit of RMB77.1 million in 2013, up from RMB59.8 million the previous year. It specializes in water treatment engineering and the development of relevant technology and equipment.

SIIC has a portfolio of water purification, water supply and waste water treatment facilities across 12 provinces, run on a build-operate-transfer, transfer-operate-transfer, build-own-operate and operation and management basis. Revenue came to RMB1.21 billion in 2013, up 51% year-on-year, while net profit jumped 15% to RMB150.1 million over the same period.

Earlier this year, RRJ teamed up with the International Finance Corporation (IFC) to invest S$113.5 million in China Everbright Water, a Singapore-listed environmental protection and alternative energy business.

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