KKR in $114m waste water treatment deal

In a move to tap into China’s growing thirst for potable water, the US firm has agreed to make a convertible bond purchase in United Envirotech.

Global private equity firm Kohlberg Kravis Roberts has agreed to make a $113.8 million convertible bond investment in Singapore-listed United Envirotech Limited.

United Envirotech provides engineering services using membrane technology to municipal and industrial waste water treatment projects, and operates waste water treatment plants across China. The company is also listed on the Taiwan Stock Exchange.

World Bank statistics show that per capita water resources in China are less than one third of the world’s average. United Envirotech claims to be providing a viable solution to water shortage and pollution problems.

“KKR’s investment will allow us to achieve further growth at a crucial time in the development of the China waste water treatment industry,” Yucheng Lin, chairman and CEO of United Envirotech, said in a statement.

The 2.5 percent coupon convertible bond has a five-year tenure and could be converted into equity shares at a conversion price of S$0.45 (€0.26; $0.37) per share, representing a 37.3 percent premium to the average closing price for the last 30 trading days, the statement noted.

At the time of writing, United Envirotech share price jumped 12.86 percent to S$0.395 each.

Stirling Coleman Capital is the arranger for the transaction and Credit Suisse acts as KKR’s financial advisor.

KKR is no stranger to the environmental industry. Earlier in May, the private equity heavyweight agreed to invest A$90 million in metal recycling group CMA as part of the distressed Australian company’s plans to restructure its operations. The firm's other portfolio companies in the space include Australian waste management company BIS-Cleanaway, Dutch waste management company Van Gansewinkel Groep, and Duales System Deutschland GmbH, a provider of packaging waste collection, sorting, and recycling services in Europe.