KKR partners with CITIC for $1bn UEL buyout

The Chinese conglomerate will be the major shareholder in Singapore-listed water treatment firm UEL

CITIC Limited, one of China’s largest conglomerates, will lead the buyout of Singapore-listed Chinese company United Envirotech (UEL), which includes existing investor global private equity firm Kohlberg Kravis Roberts, according to a statement.

The firms are offering to buy all shares in the business at a price that values the company at S$1.27 billion ($1.02 billion; €800 million). CITIC will be the major shareholder, buying existing shares in UEL including some of those owned by KKR. The private equity firm will become the second largest shareholder.

UEL will remain a listed entity, with the firms also subscribing for further shares worth up to S$150 million by way of private placement.

The business is a Singapore-listed water treatment company with its operations mainly in China’s chemical, petrochemical and industrial park sectors.

CITIC will use the investment to grow its business in environmental protection, “an area with significant growth potential in China”, according to the firm.

KKR first bet on the business in October 2011, subscribing to $113.8 million of UEL convertible bonds. The firm then made a $40 million equity injection in January 2013 to fund the acquisition of water treatment plants, upgrade existing plants and help fund the company’s working capital, Private Equity International reported earlier. 

Other firms have joined the trend, such as RRJ Capital and China Investment Corporation, who together participated in a $212m fundraise by SIIC Environment Holdings, another China-focused water treatment business listed in Singapore, last October.

“Since 2011, we have been working closely with UEL’s strong management team to enhance UEL’s technological platform and expand its business through organic and inorganic activities. We look forward to continue working with UEL, and now CITIC, as a value-added partner to support its long-term growth and provide much needed water and wastewater treatment services which will play a role in addressing China’s water challenges,” David Liu, co-head of Asia private equity and chief executive of KKR China, said in a statement.

Co-founder and co-chairman Henry Kravis added, “We are pleased to announce the formation of our partnership with CITIC. It is a world-class company and our experienced team on the ground in China will also leverage KKR’s global expertise and experience to make this a highly successful endeavor.”