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SIIC Environment forms JV to invest in China environmental companies

MAINBOARD-LISTED SIIC Environment Holdings' unit, its controlling shareholder and Shanghai Overseas (BVI) have formed a joint venture (JV) company with a committed capital of HK$100 million (S$17.3 million) to invest in environmental companies in China, particularly in Yangtze River Delta.

Committed capital and equity in the JV, Shanghai Yangtze River Delta Water Environment Investment Fund, will be split 40 per cent to SIIC Environment' unit SIIC Environment Tech; 30 per cent to Eternal Way, a unit of SIIC Environment' controlling shareholder Shanghai Industrial Investment (Holdings) Company; and 30 per cent to Shanghai Overseas.

Committed capital will be paid in cash and is split the same way as equity interest, with SIIC Environment Tech contributing about S$7 million, SIIC Environment said in a bourse filing on Monday.

Each of the three parties will appoint a member to the JV's board of directors.

The JV company will first invest about HK$52.8 million in Chinese water supplier Taizhou Water as a cornerstone investor. Taizhou Water plans to list on the Hong Kong exchange.

Apart from potential economic benefits to the group, the Taizhou Water investment also complements the company's existing water projects in Taizhou and allows further development of the group in Taizhou's utility industry, said SIIC Environment.

The JV is considered an interested person transaction, as Shanghai Industrial Investment (Holdings) Company is a controlling shareholder of Shanghai Industrial Holdings Limited, a controlling shareholder of SIIC Environment.

SIIC Environment' audit committee have reviewed the terms of establishment of the JV firm and concluded it is on normal commercial terms and not prejudicial to interests of the company and its minority shareholders.

Contributions and terms of the JV agreement were arrived at arms’ length negotiation among the parties.

SIIC Environment' shares closed flat at S$0.255 on Monday.