Salcon acquisition boosts China water portfolio

Mr. Ooi Cheng Swee (left), the Chief Operating Officer of Salcon Berhad and Mr. Thye Kim Meng (right), the Chief Executive Officer of Darco Water Technologies Ltd exchanged agreements witnessed by Tan Sri Dato’ Tee Tiam Lee (2^nd from the left), the Deputy Chairman of Salcon Berhad and Mr. Calvin Thye Kim Fah, the General Manager of Darco Systems (M) Sdn. Bhd.

Salcon Berhad has entered into a Sale & Purchase Agreement with Darco Water Technologies Limited to acquire a 60% stake in Darco Environmental Ptd Ltd for a total purchase consideration of RMB 95.8 million (approximately RM47.5 mil). Darco Environment Pte Ltd is a wholly owned subsidiary of Darco Water Technologies Limited, which is a company listed on the Singapore Stock Exchange and a well-established water and wastewater treatment specialist in Singapore.

The acquisition is expected to contribute positively to the company’s future earnings, and is estimated to generate total revenue of RMB 1.7 billion (approximately RM842.52 million) throughout the entire concession periods of the two water assets.

Upon the completion of the acquisition, Salcon will own and operate two existing water treatment plants namely Wukang (武康) and Qian Yuan (乾元) water treatment plants located in Deqing County, Zhejiang Province of China with capacity of 60 MLD and 100 MLD respectively.  These two plants are currently supplying potable water on bulk basis to Deqing County. The concession period for the operation of the the aforesaid water treatment plants is 25 years and 22 years respectively.

“The signing of this SPA marks a significant event for Salcon, as the acquisition not only expands our China assets considerably, but also takes us a step closer to achieving our vision of becoming a major player in the water and wastewater industry in China. The ownership of these 2 water assets is strategic, and we look forward to further expand our presence in Deqing county under the government’s water integration plan which offers tremendous opportunities for growth,” says Mr. Ooi Cheng Swee, Chief Operating Officer of Salcon Berhad. 

 “Salcon will bring to the table a wide network of opportunities while Darco will be able to provide its proven expertise in integrated engineering and knowledge-based industrial wastewater treatment solutions, to apply for municipal markets,” says Mr. Thye Kim Meng, Chairman & CEO of Darco Water Technologies Ltd.

In forming this strategic alliance, Salcon looks forward to also working closely with Darco Water in other areas, principally in the industrial wastewater sector which is the latter’s core strength and area of expertise.  By tapping into Darco’s proven expertise in integrated engineering and knowledge-based industrial wastewater treatment solutions, this will allow Salcon to further improve its penetration into the industrial wastewater market in China.

Deqing County is located in the Zhejiang Province, PRC and is approximately 180 km west of Shanghai, covering an area of 947 square kilometres. Deqing County has a population of approximately 450,000 and has 16 towns under its administration. The Deqing Government, under its water integration plan (Yi Thi Hua) intends to consolidate all the water-related assets to ensure an efficient delivery system, and to improve the level of service to its people. The Government has indicated its intention to expand the capacity of Wukang water treatment plant from the current 60 to 120 MLD, and to integrate its wastewater assets. As the sole and existing water operator in Deqing county, there are tremendous opportunities for growth, and the company looks forward to further expand its presence in this county.

With the latest acquisition of Wukang and Qian Yuan water treatment plants, Salcon has secured its 11^th concession in China. To date, Salcon owns eight (8) water concessions, two (2) municipal wastewater concessions and one (1) industrial wastewater concession located in Shandong, Fujian, Zhejiang and Jiangsu Provinces with a total combined capacity of 1,300 MLD.