Chewo Xin Yi, Today Online 26 Jun 08;
MALAYSIA’S AmInvestment Bank Group and Singapore’s Konzen Group have launched Asia’s first private equity fund here to invest in water projects in the region.
The proposed US$320 million ($437 million) fund will seek capital from institutional investors such as insurance companies and long-term fixed income players.
Besides infrastructure-related projects such as water treatment plants, the fund will invest in specialised water companies with innovative technologies or business models.
“Water is the very essence of life. There is tremendous scope for future growth in line with surging demand for clean water for consumption as well as environmental benefits arising from the treatment of waste water,” said Mr Cheah Tek Kuang, AmBank’s group managing director.
China will be a key focus, given the country’s water shortages and pollution problems. In fact, the Asian Development Bank estimates that China alone needs about US$140 billion worth of investments for water treatment.
Mr Yeong Wai Cheong, chief executive of Konzen, which is a water treatment company, said the fund has also identified several potential water projects in Vietnam, Indonesia, Malaysia and Thailand.
Unlike in Singapore, Shanghai or other sophisticated cities, Mr Yeong said some small Asian towns have “absolutely no expertise” in raising capital for their water infrastructure needs.
“Our experience has been that — having done all the engineering work and agreed on an engineering basis that it’s highly feasible :— they (countries) don’t know how to raise the money,” he said.
While aiming to bring money to these projects, Mr Yeong the fund also aims to be a “high-yield, income-oriented vehicle” with a projected yield of 15 to 20 per cent.
He added that it makes a lot of sense to place the fund in Singapore given its status as both a water and financial hub.
Konzen’s existing relationship with the Singapore Government and Asian Development Bank, which has actively corporated in regional water public-private partnerships, would also ensure a steady flow of projects for the fund, said AmInvestment Bank’s executive director Pushpa Rajadurai.
Despite ongoing turbulence in the global financial markets, both companies are confident that the fund will be able to attract investors.
“In fact, we think the froth in the public markets will shift investor attention towards more stable asset classes and infrastructure investment is certainly a very stable source of investment returns,” said Konzen’s Mr Yeong.
US$320m Asia water fund launched
Fund plans to focus on treatment plants in north China
Chew Xiang, Business Times 26 Jun 08;
MALAYSIA'S AmInvestment Bank and Konzen Group, a water treatment company headquartered here, yesterday launched a US$320 million water fund touted as Asia's first for private investors.
The AmKonzen Asia Water Fund will invest in assets from Konzen's established network in the region, with an emphasis on treatment plants in north China, Konzen group managing director Yeong Wai Cheong said yesterday.
To get extra revenue, the fund may invest in environmentally friendly projects in South-east Asia to generate carbon credits under the United Nations Clean Development Mechanism. These credits may be sold to European or Japanese companies.
Mr Yeong said the fund resembles a fixed-income instrument, as water projects generate a steady stream of inflation-adjusted income through tariffs paid by end-users.
The fund will invest smaller amounts in selected water companies or research projects to get some equity returns as well, which differentiates it from a listed water trust such as Hyflux's.
'It has the risk profile of a bond with equity upside,' Mr Yeong said. 'We are targeting insurance companies - anyone with long- term needs who focuses on yield generation.'
Some projects have already been identified and the fund is aiming for its first closure this October or November with at least US$100 million. Mr Yeong said investments will be 'careful and conservative' to fit the long-term needs of investors.
The AmKonzen fund has a minimum commitment of US$10 million, with 2 per cent management fees and 20 per cent of net profit paid as a bonus, after a hurdle rate of 8 per cent.
Mr Yeong said exit may be achieved by listing the fund as an infrastructure trust or through a piecemeal sale of assets.
The water industry has seen rapid growth this decade as China has urbanised. Many of China's freshwater sources are heavily polluted, leading to increasingly strident calls for environmental protection.
Mr Yeong said water tariffs could increase considerably as governments come to see market pricing as the only solution to reducing wastage and tackling water scarcity.
Tariffs in China are 15 times lower than the global average, he added. Water plants require heavy investment that public finances often cannot cope with. A number of funds specialising in water plant investments have already been set up, but Mr Yeong said AmKonzen is the first from Asia.
New $440m water fund with Asian focus
Straits Times 26 Jun 08;
A US$320 million (S$438 million) water fund with an Asian focus was launched in Singapore yesterday.
The fund, set up by local water company Konzen Group in a joint venture with Malaysian AmInvestment Bank, will invest in water-infrastructure projects and companies with innovative water technologies.
AmKonzen Water Investments Management will manage the fund, believed to be the first of its kind in Asia.
The two partner firms, which will hold equal stakes, signed the agreement yesterday at the inaugural Singapore International Water Week, which ends today.
Konzen chief executive Yeong Wai Cheong, who has been in the water-engineering business in South-east Asia for 25 years, said the firm expects to raise at least US$100 million initially.
The fund will be a 'high-yield, income-oriented vehicle' which will offer stability and behave like a bond with fixed income, he said.
The fund's Asian focus will capitalise on the region's growing demand for water - and lack of supply - which will require rapid construction of new water plants.
It will focus on investing in public and private water and waste-water infrastructure projects in China and South-east Asia, as well as private equity firms with proven water technologies, said Mr Yeong.
The projected yield of the fund, open only to institutional investors, is 15 to 20 per cent.
AmKonzen decided to set up shop here because of Singapore's 'global hydrohub' reputation.
'Singapore has a vibrant water industry, and is also a financial capital so it makes a lot of sense,' said Mr Yeong.
The fund expects to expand its assets beyond US$320 million in the long term, he added.
AmKonzen is not the only firm benefiting from Asia's booming water industry. United States-based Black & Veatch announced on Tuesday that the annual revenues of its water business in the Asia-Pacific region tripled to US$170 million last year.
The firm has also secured new projects in the water markets of Singapore, Australia and Hong Kong, worth US$34 million in the past two months.
JESSICA CHEAM
