KKR & Citec buy UEL for $1.5bn

US private equity firm KKR & Co and Chinese state-backed CITIC Ltd plan to buy Singapore water treatment company United Envirotech Ltd (UEL) for S$1.9 billion ($1.5 billion).

The consortium, through its joint venture company CKM (Cayman) Company Ltd, has made a joint bid of S$1.65 a share in cash and a comparable offer for convertible bonds held by KKR in a transaction valuing the Singapore-listed company at S$1.9 billion.

Citic and KKR, which plan to secure at least a majority stake in UEL, may buy from S$50 million to S$150 million of shares in UEL through a private placement after their offer closes.

KKR, which currently holds around 30 per cent stake in UEL, has already provided ”irrevocable undertakings” to sell its shares to CKM.
Post closing, CITIC will become UEL’s largest shareholder, with KKR becoming the second, and both intend to keep the listing status of UEL on the Singapore Exchange Securities Trading Limited.

CITIC said that with an increasing number of state-owned enterprises being involved in water and waste-water treatment business in China, the market is becoming more competitive and hence the company has decided that it will leverage on its business network and resources in the China to support UEL’s business development strategy and growth plans.

CITIC also plans to continue to invest in the water and environmental protection industry in China and to develop UEL as its flagship company for its water and wastewater treatment sector.

UEL is a leading membrane-based water and waste-water treatment and reclamation solution provider with businesses mainly in the China’s chemical, petrochemical and industrial park sectors.

Its clients include state-owned firms such as China Petrochemical Corp (Sinopec), China National Petroleum Corp. and China National Offshore Oil Corp.

Its activities include design, fabrication, installation and commissioning of water and wastewater systems using its proprietary advanced membrane technologies such as the Membrane Bioreactor technology.

UEL has designed and built several of the largest industrial waste-water treatment plants in Asia using the MBR technology.

”Our investment in UEL provides us a strong platform to develop in China’s water and wastewater treatment sector. Environmental protection is a top priority for China, and CITIC foresees not only commercial opportunity but also societal benefit from this investment,” said CITIC vice chairman and president, Wang Jiong, in a statement.