News

Hyflux taps demand for clean water treatment

By Shiyin Chen (China Daily)
Updated: 2010-08-03 09:30

SINGAPORE - Hyflux Ltd and Mitsui & Co will start a venture to buy stakes in four water treatment plants in China and offer to take Hyflux Water Trust private in transactions worth about $170 million.

Galaxy NewSpring Pte will buy the four plants for $53.1 million from Hyflux, the Singapore-based water treatment company said in a statement to the city-state's exchange on Monday.

The venture will offer to buy 205.5 million shares in Hyflux Water at 78 Singapore cents apiece, a 14 percent premium to the last-traded price, for S$160.3 million ($118 million).

Hyflux and Mitsui & Co are seeking to tap growing demand for water treatment services in China, which has 20 percent of the world's population and 7 percent of its fresh water.

The government is expected to double its budget for environmental protection and water resource development to about $450 billion between 2011 and 2015 from $219 billion for 2006 to 2010, Hyflux said, citing data from Global Water Intelligence.

"This strategic partnership with Mitsui underscores the importance of the high-growth water sector in China to both companies," Olivia Lum, chief executive officer of Hyflux, said in a press release.

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"We form a powerful platform to accelerate investments in developing critical infrastructure to meet China's needs for clean, safe and affordable water."

The venture may ask for support from the Japan Bank for International Cooperation, the global arm of government-backed Japan Finance Corp, according to Jun Aketa, a Mitsui general manager of projects development. Aketa was speaking at a media conference in Singapore on Monday.

Hyflux Water Trust last traded at 68.5 Singapore cents on July 30, having dropped 2.1 percent in Singapore trading this year.

The stock was suspended on Monday, along with shares of Hyflux, which have dropped 9 percent in 2010. Mitsui & Co rose 0.1 percent to 1,109 yen in Tokyo, trimming its losses this year to 15 percent.

Hyflux, which owns a 31 percent stake in the Hyflux Water Trust, plans to vote in favor of the privatization offer, saying that the global financial and economic crisis of the past two years has made it more challenging for the trust in securing project financing.