MWC hikes stake in Vietnamese holding firm

Ayala-led Manila Water Co., the biggest foreign investor in Vietnam’s water sector, has expanded its footprint in this market by raising its stake in publicly listed Saigon Water Infrastructure Corp. (SII) to 38 percent from 31.47 percent.

In a disclosure to the Philippine Stock Exchange yesterday, MWC said its Singapore subsidiary, Manila Water South Asia Holdings Pte. Ltd. (MWSAH), had completed the subscription to an additional of 6.146 million primary shares of SII.

The deal was priced at 16,900 Vietnamese dong (VND) per share (P36.94 each) for a total block size of 103.8-billion VND (P230 million).

SII is a holding company in Vietnam that is listed in the Ho Chi Minh City Stock Exchange. It aims to become the first fully integrated company in the Vietnam water and wastewater infrastructure sector through the construction of water and wastewater treatment plants and the provision of engineering, operation and management services and other similar activities.

In 2015, Saigon Water entered into a 25-year build-own-operate joint undertaking with Vietnam-Oman Investment Co. and the People’s Committee of Ho Chi Minh City to expand and operate the water network in Cu Chi, a district in Ho Chi Minh City. The project will be undertaken with Cu Chi Water Supply Sewerage Co. Ltd., a Vietnam limited company. Through a capital transfer agreement executed with Saigon Water in 2015, a 24.5 percent share in the charter capital of Cu Chi Water was acquired by MWSAH.

The closing of the deal is subject to the following conditions:
•submission by SII of the certified copies of resolutions of the board and stockholders of SII approving the transaction;
•approval of relevant regulatory agencies on the registration of the shares for private placement; and,
•submission by SII of an amended charter showing the increase in charter capital of SII to the extent necessary to permit the issuance of the 6.146 million shares in favor of MWSAH.

MWC is focused on expanding its reach throughout the Philippines and in the Southeast Asian region, particularly in Vietnam, Indonesia, and Myanmar markets.

In 2008, MWC was contracted to plug pipeline leakages in Ho Chi Minh City (formerly Saigon), Vietnam. When this pilot leakage reduction project was completed in August 2014, instead of winding down operations, MWC made a decision to use the local expertise acquired over the years to seek new businesses. MWC has since then found opportunity to invest in a couple of water treatment plants as well as water distribution in this overseas market.

Excluding the new investment in SII, MWC had previously invested around $100 million in Vietnam, making it the largest foreign direct investor in this country’s water space. It has five offices and affiliates in Vietnam.

Parent conglomerate Ayala Corp. has established a representative office in Ho Chi Minh City, creating a shared space with subsidiaries and Ayala Land Inc. as each unit searches for fresh investment opportunities.

Manila Water Asia Pacific Pte. Ltd. (MWAP) holds the international ventures of the company. Included under MWAP are two affiliated companies in Vietnam namely: Thu Duc Water B.O.O Corp. and Kenh Dong Water Supply Joint Stock Co., both supplying bulk treated water to Saigon Water Corp. under a take-or-pay arrangement.

Apart from SII and Cu Chi Water Supply Sewerage, the group’s Asia Water Network Solutions Joint Stock Co. was established as a new investment vehicle for investments and services within Vietnam and beyond.