Water. Desalination + reuse
Issue link: https://fhpublishing.uberflip.com/i/604344
PROJECTS November-December 2015 | Desalination & Water Reuse | 19 | desalination, whether that's desalination of seawater or brackish like we did with Pacific Rubiales Energy in Colombia. It's our largest project to date at 80,000 m 3 /d from produced water from a new oil plant. And more than 90% of that is reused for irrigation." Does that mean municipal projects are less attractive? "When it comes to desalination obviously the municipal projects are interesting but these projects are very often long-term – you go through a long tendering process. And municipalities tend not to make a decision as quickly as private businesses. But when they come, they tend to be larger." Better not bigger For Charrabé bigger is not better: "We'd rather do ten US$ 40 million projects than one US$ 400 million project." It is, he explains, a preference born out of the greater opportunity for diversification in smaller projects along with RWL Water's competitive advantage over the big players in those projects. "I think being a mid-sized company globally, that can give the same service and the same quality as the big guys – with the project finance capability that we've brought to the table – that's a differentiator. Charrabé asserts that RWL Water can execute a mid-sized project "anywhere around the world." As an example he says the company is close to bidding for two desalination projects – one in Central America and another in South East Asia. "That breadth of opportunity and strength is unique when it comes to the water market," he says. He highlights the company's project finance capability as an outstanding feature of RWL Water's offering. It includes asset leasing arrangements; build-own- transfer (BOT) contracts covering finance, construction, and operations and maintenance; and public-private partnerships all with the support of national and international financing partners. "RWL Water offers BOT finance so customers can avoid the capital expenditure and pay for water over 30 years under operational expenditure. In our market space that's rather unique. You can finance your car that way or a US$ 500 million project – but to finance a US$ 40 million deal tends to be more difficult and there are fewer players who offer it. So that's where we saw the opportunity." Large players, according to Charrabé, prefer large projects over mid-market opportunities because their overheads remain unchanged irrespective of the size of the deal the company enters. While RWL Water's project preference has remained with the small, its sphere of influence has not. Merger menu RWL Water emerged less than five years ago with the acquisition, by its founder, Ronald S Lauder, of companies in Israel (Nirosoft), Italy (Eurotec WTT), US (Aeromix), and Argentina (Unitek). How much does acquisition remain part of the business plan? "When Mr Lauder started from scratch he made strategic acquisitions to create a platform. We then took those four acquisitions together so we could grow very aggressively but organically which I think brings the best return for the shareholder," says Charrabé. "We now have a very strong platform and we are currently looking at another acquisition that would give us better access to another geography," he adds. "But it has never been our goal to be a roll up company. It was always based on strategic value – acquisitions that dropped to the bottom line in terms of profitability rather than top growth to reach a [target] revenue. Of course revenue's important but it's more important to get to a good bottom line." Charrabé points to four industrial sectors that are "sweet spots" in RWL's ambitions for its growth in profitability: the power sector, oil and gas, mining, and food and beverages. Added to Charrabé's sweet spot list is the municipal market. "We have great references in the power sector. We have supplied a lot of [containerized] ultra-pure water systems. "We are looking at the oil and gas market for produced water as we've done with Pacific Rubiales and especially now, when oil prices are lower, we're trying to make sure our customers get more juice out of the squeeze: having a cheaper way of disposing of, or taking value out of their waste water rather than rejecting it. "We are looking at wastewater from mining. And of course the food and beverage industry is very interesting to us. Not only on the industrial wastewater side but also on the freshwater side. Our company is the biggest supplier to Cocoa Cola bottling plants in Latin America on the freshwater side. "We can still do pharmaceuticals, we still do plastics, we still do everything else but I think if you ask me for where we really focus I think these are the places." Brand new The company has a global spread and its operations span the industrial water landscape. In spring 2015 it rebranded to consolidate the elements from its acquisition-based beginnings under a global banner. Other large companies created through merger have wrestled with the tension between maintaining existing strong brands and forging a pan world presence. What was RWL Water's take on that issue? "The thought process was: we have local connections but we want to tell our customers that we have global strength – how do you get that? By keeping a local component to it – RWL Water Italia for example. It now has the references and the abilities to finance, to have the backbone of a big group while having the local connection." And following a similar line of thought, RWL Water kept the original names of product lines: "We didn't get rid of those names – we tried to get the best of both worlds by making the customer understand that we have a global reputation and strength while having local businesses and engineering people." Rare beast RWL Water sought to provide "something that wasn't available" in the market when it started business in 2010. And it remains a rare animal according to Charrabé: "Somebody that can do a US$ 40 million operations and maintenance contract with an engineering procurement and construction component, financing it anywhere in the world, is very hard to find," he says. "I think that the truly unique part of RWL Water is what we have achieved in a short time. Four and a half years in the water industry is a nanosecond: a cycle of a mid-size project is about 24 months. At four years somebody asked me: what did a typical year look like going back? I have empirical data for two cycles. I cannot give you a typical year and I cannot give you a forecast because empirical data of two cycles is meaningless. "This is where the patience, the investment, and the confidence of Mr Lauder and the board have come in to allow us to build something that many others would not have had the vision to see through to completion." Lauder has forecast publicly that the value of water will, in this century, outstrip