China Everbright Water eyes 'urban sponge' deals

China's ambition to end flooding in its cities presents Singapore-listed China Everbright Water with a huge opportunity to move up the value chain, and chairman Wang Tianyi plans to seize it.

The firm, which builds and manages water treatment plants, has set a target this year to win one - and maybe even two - government tenders to build China's new "sponge cities". These are city-wide systems that catch and store rainwater during downpours, purify it and re-distribute it to residents during a drought.

Last year, the Chinese government earmarked funds for 16 cities across the nation to be transformed into urban sponges.

"This is not a single water treatment plant but an ecosystem encompassing a whole city. The investment value of each tender could be between three billion yuan (S$645 million) and five billion yuan," Mr Wang told The Straits Times.

While bidding is highly competitive, Mr Wang is confident that China Everbright's status as one of the larger state-owned enterprises (SOE) gives it an advantage.

"These are very capital-intensive projects and, being an SOE, we have access to lower-cost funding, so local municipals are more comfortable working with us," he said.

Mr Wang noted that China Everbright Water is not just any SOE.

"Our parent, China Everbright International, is one of a handful of SOEs that are controlled by the State Council, the highest executive body of the government."

China Everbright Water was formed in 2014 through the reverse takeover of HanKore Environment Tech by China Everbright International.

After acquiring another private company - Dalian Dongda - last November, Mr Wang said Everbright is getting more selective with its targets, and hopes to privatise assets from the government as well.

"There are some waste water treatment plants, water supply plants that are in the hands of the government, so these are assets we can take over," he added.

A version of this article appeared in the print edition of The Straits Times on February 23, 2016, with the headline 'China Everbright Water eyes 'urban sponge' deals'. Print Edition | Subscribe