IFC investments flow to China's water companies

The International Financial Corp has stepped up its investment in Chinese water companies and will help them seek opportunities at home and abroad, demonstrating its confidence in China's water sector.

Its latest move is providing a $70 million loan to Hong Kong-listed China Everbright International Ltd, a leading investor and operator in environmentally friendly businesses, IFC said on Wednesday in Beijing.

Everbright International will use IFC's financing to expand its environmental water business by building three water plants in China.

One is a wastewater treatment plant in Dezhou, Shandong province, which will be able to treat 150,000 cubic meter of wastewater every day upon its completion.

The others are a pioneering wastewater reuse plant that can recycle 20,000 cubic meter of water a day in Jiangyin, Jiangsu province, and a groundwater plant in Xinyi, Jiangsu province, which can provide drinking water for 30 million people.

"IFC's financing and global network in the water industry will help us better integrate our businesses across the supply chain," said Everbright International Chief Executive Officer Chen Xiaoping.

Everbright International has invested in, built and currently operates 24 water-related projects, 22 waste-to-energy plants, six hazardous solid waste landfill projects, and 18 alternative-energy projects in China.

"In a world where almost 800 million people don't have access to clean water, IFC is helping China and other countries improve water security," said Cai Jinyong, IFC executive vice-president and CEO.

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. In the 2012 financial year, their investments reached an all-time high of more than $20 billion.

IFC has financed four water projects in China - two wastewater treatment plants for Sound Global Ltd and Penyao Group, one water supply project for United Water Corp, and a China-based desalination plant for Norway's Aqualyng Holding AS.

Sun Hao, a senior investment officer at IFC, said that it is helping Chinese water companies in which it invests to seek opportunities abroad, in regions such as Southeast Asia and the Middle East.

"We will consider providing more funds to Everbright International for their mergers and acquisitions," Sun told China Daily. "The Chinese water market is of great potential but it is very fragmented."

There have been several large recent ventures in the industry. KKR & Co LP, one of the largest private equity firms in the world, made a $40 million follow-on equity investment in United Envirotech Ltd in January. The investment would be used to fund the acquisition of water treatment plants, upgrade existing plants and use for the company's working capital.

In March, Beijing Enterprises Water Group Ltd spent 95 million euros ($124 million) in March to acquire a Portugal subsidiary of French multinational Veolia Environnement.