SINGAPORE - A consortium of Indonesia's Salim Group and energy giant Medco Group has entered into a binding agreement to invest $530 million in troubled water treatment firm Hyflux.
The consortium, SM Investments, will own 60 per cent of the company upon completion of the deal, Hyflux announced on Thursday (Oct 18) after markets closed.
As part of its restructuring exercise, Hyflux conducted a competitive bidding process for strategic investments in the business.
It entered non-disclosure agreements with 16 potential candidates before the field was narrowed to eight, culminating in the deal with SM Investments on Thursday.
SM Investments will subscribe for ordinary shares representing 60 per cent of the enlarged issued share capital in Hyflux for $400 million.
It will also grant the firm a shareholder loan of $130 million and a $30 million loan for interim working capital for the period leading up to the completion of the proposed investment.
Salim Group chairman Anthony Salim said: "We see tremendous potential for synergies between Hyflux and our existing businesses as well as opportunities within our consortium in which we can involve Hyflux.
"We will work with Hyflux to keep its flagship assets intact, bearing in mind the significance of this company to Singapore."
The consortium has a track record of running diverse businesses in South-east Asia and other parts of the world, as well as experience in owning and operating water and power utilities, power generation and distribution assets and oil and gas properties.
Medco Group founder Arifin Panigoro added: "Our aim is to further grow Hyflux leveraging its strength in system integration and optimisation of water treatment and waste management as well as in power generation."
Hyflux executive chairman and chief executive Olivia Lum said: "After a rigorous selection process, the board unanimously selected SM Investments as the strategic investor.
"With the financial strength of the Salim Group and the Medco Group, as well as the consortium's combined experience, the board believes that this partnership will elevate Hyflux to a different level and open up new untapped growth opportunities."