IFC picks up 7.4% equity in Metito

Dubai: To fund its expansion programme in the Middle East, UAE-based water treatment specialist Metito has offloaded a 7.4 per cent stake to IFC, which has also provided a long-term loan of $20 million. The deals were signed on Thursday.

The stake sale and the loan will help Metito to ramp up its operations in water desalination, waste water treatment and in setting up customised water infrastructure projects in the region.

Mutaz Ghandour, chief executive officer of Metito, said the strategic partnership will enable Metito to undertake projects in a region that is constantly facing water supply challenges. "Partnering with IFC will provide the financial support to our growth plans and help us integrate corporate governance practices to support our planned initial public offering in the next couple of years.

"We have the technical know-how. The idea is to have funds available. But we cannot go alone all the time. We need financial partners. So we signed the agreements with IFC," he added.

Metito operates locally in 14 countries of the Arab and Islamic worlds, and supplies its plants internationally to locations as far apart as Argentina and Australia from its base in the UAE.

Some of the company's notable achievements in 2006-07 include high purity demineralised water supplies for Jebel Ali and Umm Al Nar power projects in UAE, drinking water supply for Kandahar in Afghanistan and high quality water supply for Iraq's North Rumaylah project.

Metito's revenues reached $100 million in 2006. It is expecting a 30 per cent rise in earnings this year. With the latest financial deal, the company hopes its revenues will reach $250 million in 2008.

Rashad Kaldany, Director, IFC (infrastructure department), said the investment in Metito's equity and the long-term loan are in line with IFC's commitment to supporting the significant water needs of the Middle East.

"We look forward to a long-tyerm partnership with Metito to demonstrate how private sector investments in infrastructure can help meet the needs of a growing economy and improve services, especially for people who need them most."

According to the agreement, IFC, a member of the World Bank, will create performance benchmarks for Metito. IFC will also monitor Metito's progress in its leading-edge environmental performance and its implementation of the health and safety action plans.

On whether there will be management participation by IFC in Metito, Kaldany said, "We might have a member on Metito's board. The decision will be taken in a couple of weeks."

As an additional benefit of the deal, Metito will be allowed to tap into IFC's extensive knowledge base on corporate social responsibility and integrate it into its own plan.