Metito secures $40m finance for expansion plans

20 July 2010

UAE based water company plans to use fund to expand into China

UAE-based water company Metito Utilities has secured a $40m preferred equity facility from the International Finance Corporation (IFC), part of the World Bank Group, and Kuwait’s NBK Capital.

Metito will use the funding to move into new markets. Around 50 per cent will be used for water and wastewater developments in the Middle East and North Africa (Mena) region while the rest will support developments in China.

The IFC supplied $20m while NBK Capital’s GSC Mezzanine Fund 1 supplied another $20m. A further $20 million could be added to the deal by a third investor should Metito deem the addition necessary and an investor found.

The funding is structured as a preferred equity quasi-debt instrument, which has an option to be converted to equity shares in Metito or paid back to the lenders. The tranche has an intended life of five years. The US’ Merrill Lynch acted as financial adviser on the transaction.

Following several large water tenders that drew intense competition with offers submitted from a wide range of players, Metito has said that it intends to retain its GCC focus while also moving towards new markets.

According to Rami Ghandour, executive director of Metito Utilities, there are many opportunities in more “complex” markets and Metito is well placed to capitalize on these opportunities. 

“We see the need to grow geographically” says Ghandour. “We are an emerging markets player [and] we are keen to adapt to the local environment.”

The facility will free up capital and allow Metito to make investments more quickly than would otherwise be possible. The deal is also important to Metito in supporting its ambitions to become a listed company.

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