HYFLUX, Singapore's biggest listed water-treatment company, will float what is likely to be the world's first pure-play water business trust on the Singapore Exchange (SGX) by the end of this year, it said yesterday.

Wire reports, quoting unnamed sources, said that the trust will be worth over $100 million. Hyflux Water Trust (HWT) will start off with 13 of its parent company's 25 plants in China. The 13 plants will have a total daily capacity of 445,000 cubic metres.

Seven of these plants will already be operational when the trust is listed, while the remaining six are expected to start operating by end-2008, Hyflux said.

By end-2009, all 25 plants will be part of the trust, said Sam Ong, Hyflux's new chief financial officer (CFO).

Hyflux will remain HWT's single largest shareholder once the trust is listed, Mr Ong said. It intends to hold a stake of between one-quarter and one-third in the trust.

Hyflux has also given the right of first refusal for all its water assets to HWT.

In addition to this, HWT will also look at third-party assets, Mr Ong said. The trust will mostly target plants that are worth at least $30 million each.

HWT's initial focus will be on China. But for the longer term, it will focus on other high-growth markets such as India, the Middle East and North Africa as well.

Hyflux, which declined to put a value to HWT's portfolio because of regulations, said that the trust will allow Hyflux to achieve its asset-light strategy.

HWT will unlock value for Hyflux's shareholders, allow the company to move faster on new projects and also take on more projects at one time, chief executive Olivia Lum said.

'HWT will also be our primary platform for investing in water-related infrastructure assets in high-growth markets such as China, India, and the Middle East and North Africa regions,' she said.

Hyflux might use the proceeds from the divestment to return cash to shareholders and pay off debt, Mr Ong said.

Hyflux executive vice- president Saud Siddique will head HWT as chief executive of the trust's manager, while Hyflux's former group CFO, Grace Goh, will be the trust manager's new CFO.

Analysts were positive about Hyflux's plan to spin off its assets. 'Clearly, this is a big positive and is one of the key catalysts we have highlighted in our recent initiation, and this is happening much earlier than expected,' said Credit Suisse in a research note yesterday.

The bank has an 'outperform' rating and a target price of $4.00 on the stock. Hyflux's shares gained 8 cents - or 2.4 per cent - to close at a one-year high of $3.48 yesterday. The stock has gained 49.4 per cent since the start of the year.