CITIC Limited and KKR have announced the formation of a consortium through related entities, CITIC Environment Protection Co. Ltd. and KKR China Water Investment Holdings Limited respectively, to make a pre-conditional voluntary offer (VGO) for all the shares in United Envirotech Ltd. (UEL).
UEL is a Singapore-listed leading membrane-based water and wastewater treatment and reclamation solution provider with businesses mainly in China's chemical, petrochemical and industrial park sectors.
The transaction allows CITIC to become the controlling shareholder of UEL through the holding of a majority interest in the consortium. This will be achieved by the consortium through the VGO subject to conditions being met, to acquire existing shares in UEL from the existing shareholders including KKR.
In addition, after the VGO, the consortium will subscribe for further shares in UEL by way of a private placement totalling SGD50 million, SGD100 million or SGD150 million which will provide additional capital to UEL. The offer price values UEL at approximately SGD1.9 billion (US$1.46 billion) on fully diluted basis. The consortium intends to maintain the listing status of UEL post transaction.
This investment allows CITIC to grow its businesses in environmental protection, an area with significant growth potential in China. The success of UEL to-date has been driven by an experienced and stable management team which will continue to lead the business with the support of CITIC and KKR. The transaction will also provide capital for UEL's further expansion. With CITIC and KKR's extensive networks and resources, it is envisaged that a further range of opportunities would be opened up for UEL.
Mr Wang Jiong, Vice Chairman and President of CITIC Limited and Chairman ofCITIC Environment Protection Co. Ltd., stated:
"Our investment in UEL provides us a strong platform to develop in China's water and wastewater treatment sector. Environmental protection is a top priority for China, and CITIC foresees not only commercial opportunity but also societal benefit from this investment. We are always seeking strategic and forward looking opportunities such as this which we believe will create value for our shareholders."
KKR's Co-Founder, Co-Chairman and Co-CEO Henry Kravis, commented:
"We are pleased to announce the formation of our partnership with CITIC. It is a world-class company and our experienced team on the ground in China will also leverage KKR's global expertise and experience to make this a highly successful endeavor."Mr David Liu, Member of KKR, Co-Head of Asia Private Equity and CEO of KKR China, added:
"Since 2011, we have been working closely with UEL's strong management team to enhance UEL's technological platform and expand its business through organic and inorganic activities. We look forward to continue working with UEL, and now CITIC, as a value-added partner to support its long-term growth and provide much needed water and wastewater treatment services which will play a role in addressing China's water challenges."