The Straits Times / The Business Times News on Hyflux

Hyflux gets IFC funding for China projects

IFC to invest US$20m in China unit SinoSpring, and make US$25m loan to sub-unit

SINOSPRING Utility, a 50 per cent-owned company of water specialist Hyflux, is receiving US$45 million of financing from the International Finance Corp.

The IFC is the commercial lending arm of the World Bank.

It will make a US$20 million investment in SinoSpring, in the form of a preferred convertible bond issue, said IFC infrastructure department director Francisco Tourreilles yesterday.

SinoSpring is mainboard-listed Hyflux's vehicle for China-based water treatment projects and is currently executing eight contracts.

The other 50 per cent stake in SinoSpring is owned by RB (Labuan), a subsidiary of Ramatex Berhad, a Malaysia-listed textile manufacturer.

The IFC will also make a US$25 million loan to Tianjin Dagang NewSpring Co, a wholly owned subsidiary of SinoSpring.

The company is currently building what will be China's largest desalination plant when completed.

The Dagang project will have a capacity of 100,000 cubic metres per day of industrial and potable water. When the project was first announced in 2004, Hyflux said it would need an initial investment of US$90 million, with possible plans to expand the plant to 150,000 cubic metres per day by 2008.

Olivia Lum, founder and CEO of Hyflux, said the IFC deal 'marks the delivery of our first strategy to optimise capital structure and open up other sources of capital and equity'.

Describing the IFC as an 'invaluable partner', she said it could bring in different expertise in financial solutions, and that Hyflux could better tap into other markets by being under the IFC umbrella.

The IFC works with several companies around the world in developing the water sector, which it considers one of its top priorities, Mr Tourreilles said.

The IFC was recently reported to have invested US$10 million for a 13.4 per cent pre-IPO stake in Epure International.

This is a China-based water treatment firm currently seeking a Singapore listing.

Lars Thunell, executive vice-president of the IFC, said Hyflux was chosen for having won many corporate awards, which demonstrated the quality of its management, its tradition of transparency, innovative technology, and its experience and track record in China.

Ms Lum reiterated that Hyflux is exploring a business trust structure to free up equity and reduce its debt-to-equity ratio.

Hyflux shares rose 7 cents to close at $2.37 yesterday.