Deal focus: CITIC identifies OBOR cleantech angle

The CITIC Capital Silk Road Fund looks far and wide for returns arising from the Chinese government's One Belt One Road (OBOR) initiative. Contrary to widely held assumption, the mandate for the vehicle – which has a target size of $400 million – is not restricted to infrastructure. Clean energy, food and water safety, and transport and logistics services are all within its remit. And these assets could be located in or outside of the typical OBOR jurisdictions.

The fund recently led a $21 million Series D round for Organica Water, an US-based wastewater treatment services provider. Several existing backers – including the International Finance Corporation, US-based RNK Capital and WLR China Energy, Idinvest Partners of France, and Austria-based Gamma Capital Partners – also re-upped. The company has offices in the US, Hungary, China, India and Indonesia. It generates approximately 45% of its revenue from China and 45% from Indonesia, the Philippines, Vietnam, and India. 

"We have a different angle when we look at the Silk Road markets, by focusing on unique technology and services, sourced globally, that can be applied broadly across these markets. That's why we're interested in companies like Organica Water, which is one of many such cases we have invested in through the previous and current funds," says Fanglu Wang, who leads the investments for the CITIC Capital Silk Road Fund and the CITIC Kazyna Investment Fund. 

While conventional wastewater treatment facilities tend to be ugly and smelly and occupy large tracts of land on the outskirts of cities, Organica's plants are small, odor-free and styled like botanical gardens, using technologies based on biological materials including engineered root structure systems. As such, they can be located close wastewater sources in urban areas. Building costs are the same as for conventional facilities, but they operating cost if 30% lower. This is because they require less energy and produce less sewage sludge as a result of the wastewater treatment process.

Organica has so far installed more than 100 plants globally. There is expected to be an extension to the Series D round, which would provide sufficient funding to develop larger and more complex facilities in Asia. Organica CEO Ari Raivetz has identified China as one of the company's most important growth markets in the light of OBOR. The CITIC Capital Silk Road Fund, with its presence in China and other Asian countries, should be well positioned to support expansion. 

"We think OBOR is quite important for our business. Some of our largest and most high-profile reference facilities are in China, in cities like Shenzhen and Shanghai. The idea is to bring a proven concept that works in the Chinese market to countries along the Silk Road, and leverage the strong network of our PE backers to access some of these opportunities," says Raivetz.   

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• Topics
• Greater China
• Southeast Asia
• Infrastructure
• Cleantech
• Expansion
• China
• Growth capital
• One Belt One Road
• CITIC Capital