Colonial First State buys NSW recycled water facility

Colonial First State Global Asset Management has invested in the Kooragang Industrial Water Scheme, a recycled wastewater treatment Facility in Newcastle, New South Wales.

Water Utilities Australia, a platform wholly owned by First State’s funds, has acquired the scheme from the government-owned Hunter Water Corporation, it said in a statement. The price and terms were not disclosed.

The water utility was commissioned in 2014 to supply industrial water to large consumers in Kooragang Island’s heavy industrial precinct in the Port of Newcastle, in a bid to take those users off the main potable water supply.

It was designed and built by Hunter Water to high technical standards, which secured an Environmental Protection Agency Licence – this will be transferred to the new owner and operator.

The project infrastructure includes reclaimed effluent supply pipelines, a water treatment plant, delivery pipelines to customers and related storage, pumping and metering equipment.

In December 2015, Japanese trading company ITOCHU Corporation committed to the scheme as its debut investment in the recycled wastewater treatment sector in Australia. It has now fully exited its investment, Infrastructure Investor understands. ITOCHU couldn’t be reached for comment, while First State had not responded to queries by the time of publication.

Jim Bentley, Hunter Water’s managing director, said the sale of the scheme would allow the company to reinvest the capital into essential infrastructure required to meet the needs of the region’s growing population.

“For First State, this is an ideal investment,” said Graham Dooley, chief executive of WUA and a senior advisor to First State. “WUA has been pleased to add this industrial water utility to its other two water utilities as a step in its strategy of building a portfolio of water utility and infrastructure investments across Australia.”

“Like most water infrastructure investments, it also yields a steady return on investment to First State’s funds and its investors that is not dependent on rainfall,” added Dooley.

WUA acquired two utilities – the Willunga Basin Water Company and Lightsview ReWater Supply – from a private equity consortium in December last year. The platform owns a water utility operating licence issued by ESCOSA, the economic regulator in South Australia, and is expecting a new licence from IPART, the equivalent NSW economic regulator, soon.

Suez Water Australia has entered into a contract with WUA to perform the operations and maintenance role on the site and to manage the day-to-day customer interface.