Vol 13, Issue 4 (April 2012)

Need to know

• CORPORATE ACTION

  Corporate financiers have been busy this month, with Pentair announcing a merger with Tyco Flow Control, Rexnord floating on the New York Stock Exchange, and Norit lining up advisors for its IPO.

• PPP PICKING UP

  Public-private partnerships are gaining momentum in Brazil.

• SCARCITY MATTERS

  India’s Supreme Court waded into the country’s water resource debate on 27 March by issuing a directive to the central government to take forward the grand national river inter-linking project.

• EU FRICTION

  Spain’s desal programme has been put under the spotlight after environment minister Miguel Arias Cañete claimed that the country’s 17 new desalination plants are running at an average of only 16% of capacity.

• SPRING IS HERE

  This month there were positive signs for contractors in Libya, where money has started to flow again on the Great Man-Made River Project.

Analysis

• Finding the exit route

  Christopher Gasson looks at the implications of this month’s two big deals.

• Operators need good design

  Local operators are making inroads into the growing O&M market, argues Tom Scotney. How can they continue to improve their position?

• Entering a Brave New World

  Charles Bodhi offers his advice on how to do business in Myanmar.

• David Lloyd Owen - Northern Ireland revisited: peace-meal progress in a political vacuum.

  One hundred columns ago, back in January 2004, the future of Northern Ireland’s Water Service was considered.

• Chart of the Month - % change in annual capex on urban water and wastewater in Australia

  This month’s chart shows the difference the 2003-9 drought had on capital expenditure by major urban utilities in Australia.

General

• After the pre-treatment

  Emma Welsh hopes your vision is clearer than hers.

• Third time lucky for Rexnord IPO

  Rexnord’s stock market flotation is the latest in a string of high-profile M&A deals in the water sector. How willing are investors to take on highly leveraged companies?

• Debt-laden Norit looks for spring IPO success

  The activated carbon specialist’s debt service bill soared to 24% of revenues last year. The sale of new shares on the stock exchange will help to alleviate the burden.

• Tyco takes value creation to a new level

  The decision to merge Tyco’s spun-off flow control business into Pentair has immediate advantages for both sides. Cross-selling synergies will take longer to play out.

• The last of the big water M&A deals?

  The recent rush of big-ticket activity in the water M&A market has filled the vacuum left by the onset of the financial crisis. How long before it runs out of steam?

• Bluewater welcomes fresh capital injection

  The company’s rapid growth has been bolstered by a new equity injection. It offers reassuring evidence that investors are willing to commit growth capital to the water sector.

• Ombu branches out into water investment

  The recent equity sponsorship of Bluewater Bio underscores the key investment thesis of UK-based Ombu Group. CEO Stephen Brooke spoke to GWI about his plans to help water tech firms boost their market penetration.

• EU spotlight turns on Spain’s water policy

  The European Union has threatened to suspend funding to the Spanish government unless it tackles fundamental issues in the way water is priced and delivered. Irrigators would bear the brunt of the reform.

• What price subsidised water?

  Agriculture accounts for 80% of Spain’s water consumption. The current subsidy system means that is unlikely to change.

• Czech private operators at odds with EU

  The EU’s apparent reluctance to extend subsidies to Czech water utilities run by international private operators is causing friction. What are the issues at stake?

• Czech-ing out the competition

  Who’s who among the Czech international private water operators?

• Suez and RWE exit Budapest

  Budapest has set a price to buy out the foreign minority shareholders in its waterworks company. It is offering less than what they paid back in 1997.

• IDE results shine as bidders begin to circle

  A robust set of annual results from Israeli desalter IDE Technologies should heighten the bidding war for a 50% stake in the company. Vendor Delek needs to raise cash fast.

• Northern Israeli SWRO faces delays

  Desal is urgently needed to counter increasing salinity in the Sea of Galilee.

• Oman plans a second BOO generation

  Oman’s pipeline of privately financed desalination projects looks set to cover the rise predicted in its latest demand projection figures. What are the drivers behind the build-out?

• Looking beyond the end of a desal era

  Oman has to decide what to do with its privately financed desal plants once their offtake contracts run out.

• Dubai emphasises demand management

  The emirate used to meet the demands of growth by building new desalination plants. It has found a much cheaper way of keeping supply and demand in balance. Too bad for desalters.

• Saudis bundle water and sewerage assets

  The long-awaited spin-off of water and sewerage infrastructure assets in the Kingdom looks to be imminent. Wastewater will lead the way in attracting private sector involvement.

• Money flows again on man-made river

  A thawing of Libya’s financial system has led to the first payments to contractors since the revolution. It is a positive sign from a country with significant infrastructure needs.

• IWTS seeks to expand industrial roll-up

  A newly formed investment holding is looking to build an industrial wastewater treatment platform. It has already snapped up two specialist players.

• Birth of a bespoke solutions provider

  Industrial wastewater solutions company IWTS is on the acquisition trail. What has it bought so far?

• The bid to maximise Brazil’s PPP potential

  The pipeline of water and sanitation PPPs is starting to pick up in Brazil. Political resistance and poor information flow mean that international operators are still wary. Alexandre Spatuzza reports from São Paulo.

• Asia Water seeks second listing in 2012

  The next move in Shanghai Industrial’s game of water chess will be to float a portion of Asia Water on the Hong Kong stock exchange. It also plans to move into desalination.

• Loosening the Persero strings in Indonesia

  Sarana Multi Infrastruktur has a broad mandate to finance Indonesian infrastructure. Vice president Edwin Syahruzad spoke to GWI about its growing role in the water sector.

• Small cap, deep pockets: UEL’s metamorphosis

  Singapore’s United Envirotech is looking to increase gearing as its investment spree gathers momentum. CEO Lin Yucheng spoke to GWI about his plans to transform the business.

• Philippines government to guide local PPPs

  Manila wants to see more local-level PPPs. A new bulk water project in Cebu is leading the way.

• Reading Indonesia’s split-level PPP market

  Indonesia’s ‘showcase’ water PPPs may all be stuck in the pre-tender phase, but private participation in the sector is flourishing under the ‘B2B’ model. GWI’s Asia editor Olivia Jensen investigates.

• BioGill looks to fish farming for growth

  A capital injection and the acquisition of key intellectual property should enable the Australian wastewater treatment specialist to grow aggressively. CEO John West has ambitious roll-out plans.

• Building a biomimetic respirator

  The BioGill was developed by government scientists. How does it work?

• Trility broadens offering with Hydramet deal

  The acquisition of a small-scale systems integrator will provide access to a broader base of industrial clients – and Siemens technologies.

Brief

• AMERICA WATER IN BRIEF

  The International Finance Corporation is proposing to lend BRL100 million ($55 million) to Brazilian water concessionaire AEGEA Saneamento.

• EUROPE WATER IN BRIEF

  Moody’s Investors Service has declared that the current drought in SE England – and the temporary restrictions placed on household consumers – is unlikely to affect the ratings of UK water companies.

• MIDDLE EAST WATER IN BRIEF

  A joint venture comprising AquaTreat and Stulz-Planaqua has been awarded the contract to expand the Kofranja wastewater treatment plant in Jordan, after a long bidding process.

• ASIA WATER IN BRIEF

  The International Finance Corporation is considering an equity investment of up to $24 million in Indian water project developer Doshion Limited.

GWI Water Index

• Broader malaise drags GWI index down

  Water stocks tracked the wider market down this month, with Europe and Asia coming off particularly badly. Meanwhile, a slew of initial public offerings will add new depth to the investment opportunities on offer.

Market Profile

• Feeding a growing water business

  The food and beverage industry is a big user of water, and it is becoming an even bigger user of water technology, as concerns about corporate water stewardship coincide with rapid expansion into emerging markets.