Water. Desalination + reuse
Issue link: https://fhpublishing.uberflip.com/i/867173
When RWL Water was formed it 2010 it began by focusing on mid size water projects. Over the past seven years, it has racked up 7,000 references in 70 countries. On 12 July 2017 it took another step forward when shareholders in Australia-listed Emefcy group voted in favour of a merger deal. H enry Charrabé, newly appointed chief exec- utive of Fluence Corporation, the company formed in July by the merger of RWL Water and Emefcy, has worked for the business' major investor Ronald Lauder for 16 years. A political scientist and Harvard graduate, Charrabé was a senior executive at RSL Investments Corp., an entity controlled by Lauder, when he was "tapped" by the investor, he says, to help establish RWL Water. Begin- ning in 2010 with a series of strategic acquisitions of four water companies — one each in North America, South America, Europe, and Israel — RWL Water has, on Char- rabé's watch, grown organically at a rate of 20 to 30 per cent a year to reach $60 million in annual revenue. His appoint- ment to the top job at the newly formed Fluence reflects his success over the past seven years. Charrabé's ambition now is to keep up the pace of growth at the merged business. "RWL Water grew 20 to 30 per cent year-over-year organ- ically, excluding acquisitions. And surely we want to strive to continue that growth at Fluence as well," he says. The combined revenues of RWL Water and Emefcy were $62 mil- lion for 2016, and the forecast for 2017 is for sales of more than $90 million. RWL Water's success can be ascribed at least partly to the clarity of Charrabé's strategy. He sought to carve out a position in the market for mid-size water projects of around 30,000 m3/d. Too big for the smaller players to finance and service, and too insignificant for the big boys to pay much attention to, industrial and municipal clients seeking a mid- size water and wastewater treatment solution proved wel- coming of a specialist provider. Now shareholder Lauder, a global figure who was US ambassador to Austria from 1986 to 1987 under president Ronald Reagan, and is an investor, art collector, and political activist with strong Jewish herit- age, as well as an heir to the Estée Lauder beauty products fortune, is backing Charrabé further as he sets out in lead- ing the newly merged company through the next phase of its history. Standardised systems The merger was structured as an all-stock transaction, with RWL Water shareholders receiving 110.5 million new Emefcy shares, and a cash payment of $10,000, while Lauder's RLS Investments subscribes for $20 million of new Emefcy shares. The deal implies an enterprise value for Fluence of $85 million. Emefcy shareholders own 66 per cent of the merged group, RWL Water shareholders 25.8 per cent, and Lauder owns 9.2 per cent. The focus of the new entity continues to be mid size decentralised water treatment solutions. "The idea is to spend a significant amount of time and money on engi- neering hours upfront, and to come up with a standardised system that you can deploy without having to re-incur the engineering hours. The larger players tend to look at dif- ferent project sizes, and the smaller players don't have the in-house cash or capabilities," says Charrabé. "That's really where the need is, and that's where Fluence is primarily situated to capture that market because we are in a very nice arbitrage. We are not the very big guys, and we are certainly not the very small guys. That's why focusing on that market area is incredibly beneficial." China opportunity Particularly, it is hoped that the new investment will sup- port expanded production capacity and global sales of Emefcy's proprietary Membrane Aerated Biofilm Reactor (MABR) technology, which Charrabé says is a good fit for decentralised and rural wastewater reuse. Right now, the business has its sights trained on China, whose latest five- year plan sets out a vision to expand wastewater treatment to 440 million rural Chinese people, potentially represent- ing a fertile market for Fluence's quick-to-deploy, mid-size MABR solution. "This is a $15 billion, one-time opportunity in the next five years. Obviously, it would be arrogant for us to assume that we can capture the entire market, but there is huge potential. If we can capture a nice portion of that market in the next two to three years then of course it will be tremen- dous growth," says Charrabé. The company has so far signed nine integrator part- ner agreements with large Chinese state-owned entities (SOEs) that win the concessions from municipalities (see box, page 18). "Fluence becomes a subcontractor to the SOEs," explains Charrabé. Also in China, anaerobic digestion and packaged freshwater treatment systems are proving popular with industry, particularly food and drinks companies. Within Emefcy's half-year update, published on 3 July on the Australian Securities Exchange (the merged com- pany will continue to be listed there), the company notes "significant progress in China on production and commer- cial sites," including four installed MABR demonstration projects. Demo plant Jinzi Changzhou was commissioned and is in operation, in partnership with Chinese SOE Jiangsu Jinzi Environmental Technology Company, which oper- Water. desalination + reuse September 2017 Interview 9 Henry Charrabé is a protégé of investor Ronald Lauder, and is backed by him as CEO of newly created Flu- ence Corp