Water. Desalination + reuse
Issue link: https://fhpublishing.uberflip.com/i/749211
design and construction contract for a new desalination plant and related infrastructure. "The people trying to operate it, Brazilian engineering and construction rm Andrade Gutierrez, that's the only seawater RO plant that they run, and so they don't really have the operating experience, and they have a hard time with it," explains Brown. He adds that the two companies have "very complementary skills, Andrade Gutierrez in construction and AquaVenture in operations, so we expect to nd other projects in the future where our organisations can collaborate". AquaVenture has been actively investing in South America, particularly in Columbia; and in Chile and Peru, both water-stressed environments with large population and industrial growth, that historically rely on water from the Andes Mountains, a source "that has become strained," says Brown. The company is also active in the Middle East, with a small operation in Saudi Arabia, and an oŠ ce in Dubai. "The Middle East is the biggest desalination market in the world, and we are particularly looking for acquisitions there. There's an opportunity because there's a huge population of desal plants, and some of them are having trouble," Brown says. The last big area of activity is Texas, where AquaVenture has a joint venture with the Texas General Land OŠ ce (GLO) to develop desalination projects on a shared income basis. "It is pretty well known that the salinity of the aquifers in Texas is increasing, and the production of the aquifers is decreasing, indicating that they are being over-pumped. Texas has huge industrial areas that need water to operate, and to desalinate the sea is the most viable option," Brown says. The Texas GLO has a mandate to use land to develop projects that generate income for the state. The markets appear to like AquaVenture's strategy, and a slew of analyst rms began covering the rm following the Peruvian acquisition. Only investment research platform Seeking Alpha has dared to raise a dissenting voice, syaing: "I do not understand the enthusiasm surrounding this o" ering given the lack of growth and poor margins." However, Brown points out that AquaVenture has generated 18 per cent revenue growth in the rst half of 2016, and growth in adjusted Ebitda of 38 per cent. "We've been growing revenue at 25 to 35 per cent a year, and we're now more than $100 million revenue. In 2016, our earnings are growing a lot faster than revenue, and revenue is growing at circa 20 per cent a year," he says. "The IPO has performed better than I frankly expected. What's very rewarding is the quality of the institutions that chose to buy into it, leading mutual fund managers in the US." Water. desalination + reuse December 2016 19 20 21 22 23 24 25 Oct 27 Oct 25 Oct 23 Oct 21 Oct 19 Oct 17 Oct 15 Oct 13 Oct 11 Oct 9 Oct 7 AquaVenture shares since IPO AquaVenture shares trade as WAAS, or water-as-a-service, a trademark refl ecting its business model, which focuses on buying up ageing desalination plants and upgrading them, as well as operating point-of-use water coolers across the US. Share price in $