Deals

Goldis Berhad marks third Chinese water investment

The Malaysian firm will build and operate the Shangdong-based plant for 25 years and eventually transfer it back to the Chinese government, which is developing tougher rules to combat water pollution - a big problem in the world's most populous country.

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The private equity arm of Malaysian property developer Goldis Berhad will invest MYR13.8 million ($4 million; €3 million) to build and operate an industrial wastewater treatment plant in the northeastern city of Zou Cheng in Shangdong Province.

The 25 year concession is Goldis Berhad's third investment in a water treatment plant in China. The firm already operates two similar concessions in the country, which were both developed through another platform company, Crest Spring.

The Zou Cheng investment, which includes an undisclosed debt component, will be made through Goldis Water, a platform company of Goldis Berhad, which won the contract in an open tender bidding process.

The firm expects to recoup its investment in five to eight years, a spokeswoman said in an interview. Ownership will be transferred back to the Chinese government at the end of the concession.

Construction of the wastewater treatment plant will begin in August and is expected to be completed at the end of 2010. The plant is expected to reach its maximum water treatment capacity of 80,000 cubic metres a day in the next four to five years.

Water pollution: big
problem in China

Increasingly polluted water resources have led the Chinese government to develop legislation regulating the discharge of waste water. With more stringent regulations and standards being enacted, the firm expects demand for its services to increase in China, Justin Lee, director of Zoucheng Xincheng Waste Water, the concessionaire’s vehicle, said in a statement.

China’s rapidly growing economy coupled with its large population has increased its demand for clean water resources, creating opportunities for investments in the water sector.

This May, Asian fund management group First Vanguard Assets and Asian conglomerate Zhongzhi Enterprise Group jointly launched a water infrastructure fund targeting $500 million and focused primarily on China.

Other investors, including a global investment bank, are known to be in the process of contemplating similar funds.