Last year, VC/PE investment in wastewater treatment surged sevenfold.
China's 12th Five-Year Plan for environmental protection projected a total social investment demand of approximately 3.4 trillion yuan in environmental protection, with wastewater treatment being a key investment area within the industry. Venture capitalists, known for their keen sense of opportunity, quickly identified investment potential. According to data from CVSource, a financial data product of ChinaVenture, VC/PE investment in the wastewater treatment industry in 2011 surged significantly to US$558 million, a nearly sevenfold increase from US$71.2 million in 2010.
ChinaVenture data also shows that from 2008 to 2011, a total of 47 VC/PE financing cases were disclosed in China's wastewater treatment industry, with a total financing amount of US$852 million and an average single financing amount of US$18.13 million.
A data comparison clearly shows that the investment amount in 2011 alone exceeded 65% of the total investment over the previous four years.
Looking at the significant transactions of last year, in March 2011, CDH Investments acquired Singapore's Xin Da Technology Group for US$258 million, the largest transaction in the water industry in recent years. In addition, United Envirotech Limited, a Singapore-listed Chinese water treatment and reuse solution provider, also attracted attention from PE firms. In August 2011, KKR invested US$114 million in purchasing its convertible bonds.
In the exit market, according to the list of companies applying for initial public offerings (IPOs) released by the China Securities Regulatory Commission on March 22, four wastewater treatment-related companies—Bosche Environmental, Huaneng Demei, Guozhen Environmental, and Motian Membrane—are planning to list on the A-share market. Three of these companies have a VC/PE background. CITIC Securities' Motian Membrane has already passed the issuance review meeting; Marubeni's Guozhen Environmental is addressing feedback; and Dacheng Capital's Huaneng Demei is undergoing initial review.
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