Doha: Qatari Diar, a unit of the country's sovereign wealth fund, acquired a 5 per cent stake in French utility giant Veolia Environnement SA to work on joint projects.

The value of the stake would be around 646 million euros ($874 million, Dh3.28 billion), based on calculations based on Veolia's share price on Thursday.

The purchase "reflects the two groups' mutual ambition to work together on infrastructure and utilities projects in the Middle East and North Africa," Veolia, the world's biggest water company, said in a statement yesterday.

Qatari Diar will be appointed to the board of directors of Veolia subject to approval at the French giant's annual shareholders meeting on May 7 and has indicated "it will hold its stake and its voting rights for three years," Veolia said.

The acquisition of a stake in Veolia follows that of Groupe Industriel Marcel Dassault, or GIMD, which said last month it has more than 5 per cent of Veolia stock and voting rights and will maintain its holding for five years. French state-owned bank Caisse des Depots et Consignations holds a 9.6 per cent stake in Veolia and is the largest holder.


Chairman Henri Proglio, who will leave the water company this year after his appointment as head of Electricite de France SA, has expressed concern in the past about a "sort of creeping control by shareholders who would dictate short-termist views of growth."

Proglio, who was chief executive before moving to Electricite de France SA in November, said he supported long-term shareholders who would work to build more value.

The deal "comes in the wake of our initial agreement with the UAE Mubadala Fund in the water sector which has enabled the group to win a number of new contracts," Veolia CEO Antoine Frerot said in yesterday's statement.

Veolia reached a joint venture agreement in October, 2008 with Mubadala Development Co. that included water and waste- water projects in the Middle East and North Africa.

Veolia has 310,000 employees around the world and operates in four sectors: water management, waste management, energy management and transport.