News Column

Metito deal to bring in more investments

July 7, 2014

Arab News, Jeddah, Saudi Arabia

July 07--JEDDAH -- Metito Holdings, Ltd. (Metito), has announced a strategic partnership with Mitsubishi Corporation, Mitsubishi Heavy Industries and Japan Bank for International Cooperation.

The partnership has been forged through the acquisition of a strategic block from Gulf Capital.

Metito, a leader and provider of choice for total intelligent water management solutions in emerging markets, says the move will see significant investments into the company and propel Metito further on its journey of success, said a Metito statement.

The partnership comprises a share purchase agreement with MC and MHI, which will acquire 38.4 percent of Metito shares, predominantly from its existing shareholder Gulf Capital.

JBIC will also subscribe as a preference shareholder, providing Metito, a capital intensive business, with additional funds of up to $92 million to fund growth opportunities.

This investment aims at supporting overseas business deployment of Japanese companies, establishing a strategic partnership between the MC, MHI and Metito -- a leading water company in the Middle East.

Such deal will undoubtedly strengthen the ties between the Middle East and Japan in the water and wastewater industry, and will further build a leading and competitive working platform in emerging markets.

The partnership also generates synergy merits in a range of areas, including financial strength and capability, complementary experience and global networks, business development opportunities and operational capability.

Mutaz Ghandour, CEO, Metito, said: "MC and MHI are exceptional companies. We are excited to be partnering with them to implement our strategic plans for growth and to seize the opportunities that await us, as we fully utilize our varied synergies."

Ghandour said: "Metito is already well poised to tap into projects of various scales, and this partnership, in addition to the investment by JBIC, will expedite the company's growth through creating new opportunities and allowing us to become more competitive, globally."

Masaji Santo, senior vice president, division COO, MC, said: "This investment is ideal for us as it creates a compelling strategic partnership capitalizing on our global network and corporate capabilities and Metito's unique value proposition."

Santo said: "The numerous mutual benefits stemming from this deal will ensure world-class water solutions are brought to new markets, benefitting more people in a stronger and sustainable manner. Metito's long established expertise and local presence in strategic emerging markets will be an advantage when looking to secure further development opportunities in water challenged areas that offer massive growth potential."

Yoichiro Ban, senior general manager, MHI, said: "This is a synergistic partnership with Metito's strengths enhancing ours and vice versa. Working together will enhance MHI's business and open many new opportunities, particularly in the emerging markets where Metito is well positioned as a leader in the water and wastewater sector. The operational capabilities along with the combined local and global expertise of all the partners, paired with the strong financial backbone will drive this business, making it a fruitful and complementary partnership."

Commenting on this, Masaaki Yamada, director general, Power and Water Finance Department, Infrastructure and Environment Finance Group, JBIC, stated: "This investment is very much in line with our mandate to support Japanese companies looking to invest in emerging markets. In recent years, Japanese companies such as MC and MHI have had an increased appetite for expansion in the Middle East and GCC region. JBIC supports this development, and in this case subscribed as a preference shareholder in Metito to provide the company with stable financing to fund new growth opportunities."

The deal will see MC and MHI acquire a total of 38.4 percent stake in Metito, and both Gulf Capital and the International Finance Corporation (IFC) -- a member of the World Bank Group -- continue holding 23.8 percent and 3 percent of Metito, respectively.

Karim El-Solh, CEO and managing partner of Private Equity at Gulf Capital and serving chairman of the board of Metito, said: "This strategic investment into Metito by MC, MHI and JBIC is a reflection of the success of the management team and the Ghandour family."

Already established as a profitable entity, since Gulf Capital's initial majority investment in Metito in 2006, the company increased its net profitability by 661 percent.

It further strengthened this position as a leading provider in the global water and wastewater industry, registering an annual compound growth rate of 17 percent in revenues, 32.3 percent in EBITDA and 33.6 percent in net profits over the last eight years.

This has enhanced the company's fortunes and has justified our ongoing investment in the company that has achieved in excess of our targeted returns of 3X of our investment.

This collaboration between a long established family business and a leading regional private equity firm, and its evolution into this new partnership with MC, MHI, and JBIC, serves as a model template for future regional investments into family owned businesses in the Middle East.

As a capital intensive sector, strategic partnerships in the water industry that involve compatible and complementary companies can ensure sustainable and steady reach to water challenged areas, and this partnership is propelled by all the right factors that will ensure its success.


(c)2014 the Arab News (Jeddah, Saudi Arabia)

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Source: Arab News (Saudi Arabia)

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