Mainboard-listed Darco Water Technologies and InfraCo Asia Development have teamed up for four municipal water-treatment projects in Vietnam on a Design, Build, Own and Operate (DBOO) model.
This will be Darco's first DBOO project in Vietnam and marks its transformation to an asset ownership model for its overseas growth.
The move was facilitated by government trade agency International Enterprise (IE) Singapore, which brought in InfraCo Asia, an infrastructure development firm, to bridge the company's gaps in funding, leadership and experience in DBOO deal structuring. It also supported Darco in its feasibility studies.
The four projects in Vietnam aim to provide up to 62,000 cubic m of water that will benefit approximately 500,000 residents across the country, said Darco and IE Singapore in a joint statement yesterday.
Investments for these 50-year concession projects total around $50 million.
The first project in the Ben Tre province will begin construction in the fourth quarter of this year, and will provide 15,000 cubic m of water a day to industry and about 15,000 households. The other projects will start next year.
Darco, which recorded $60 million in revenue last year, derives turnover mainly as an engineering, procurement and construction player specialising in industrial water treatment.
To grow further, Darco is now working with IE Singapore to move across the value chain to take on ownership projects, said the joint release. "This allows the company to enjoy recurring revenue, improve cash flow and take on bigger projects overseas."
Darco chief executive Thye Kim Meng added: "With the engineering, procurement and construction scene getting more competitive, it is important for us to move ahead in the value chain to extend our foothold in the water purification sector.
"By building up on Design, Build, Own, Operate projects, the strong recurring revenue will allow Darco to grow more significantly.
"IE Singapore and InfraCo Asia both played important roles in helping us clinch our first DBOO project through their expertise. Through these smaller-scale decentralised projects, we can amass experience to scale up for bigger municipal projects in Vietnam and South-east Asia."