Kuwait-based NBK Capital’s recent commitment of $20 million in mezzanine financing to Metito Utilities, a water and wastewater treatment solution provider with over 50 years operating history in the water industry and a wholly owned subsidiary of Sharjah, UAE-based Metito Holdings Limited (MHL), comes less than one month after the International Finance Corporation (IFC), a member of the World Bank Group, agreed to invest $20 million in the firm in order to “support access to basic water supply and sanitation services in water-stressed regions of China and the Middle East and North Africa.”  Per Rami Ghandour, Executive Director of Metito Utilities, “This unique deal confirms the strength of Metito’s business model and supports our progress toward becoming a listed company, demonstrating the expansion of our investor base.”  MHL operates in over 22 countries and is the largest privately owned water treatment company in the region.  Its portfolio of wastewater treatment and desalination projects consists of nine concession-based projects and nine plants across the UAE, Bahrain, Egypt and China.  Meanwhile, the Middle East, which has roughly five percent of the global population, has just one percent of the world’s accessible fresh water and thus Gulf countries have hitherto relied on desalination, which provides almost 80 percent of the region’s potable water. 

While the IFC, per reports, has sought to extend reach and access while reducing scarcity in the water sector since 1993, MHL began its operations in 1958 in Beirut and now works across the Middle East with clients ranging from Saudi Basic Industries to Emaar Properties.  In the past several years it has increasingly talked about going public against the backdrop of not only rising demand for its desalination, water and wastewater treatment services, but also its own technological breakthroughs.  In July 2008, for instance, the firm announced the completion of an advanced, international-standard reverse osmosis polishing plant that it said would process 18,000 cubic metres of treated sewage effluent (TSE) every day and drastically reduce the water requirements of the UAE’s Palm Jumeirah’s cooling system.  The plant takes treated effluent and converts it into high quality, organics-free industrial water that is suitable for feeding the district cooling system and per officials would reduce district cooling water requirements by around 6.5 million cubic metres per year.

MHL realized doubled revenue and EBITDA during 2008-2009, and the future looks even brighter per some analysts, if for no other reason than burgeoning population increases across the Middle East and North Africa (MENA) region.  In particular, said its Managing Director, Fady Juez, “Libya has been closed to new projects for a long time – especially due to the Lockerbie incident.  But Tripoli is now opening up. It has huge amount of projects and Libya has one of the best beaches in the world.  So there will be a need for more projects such as in real estate.”  Moreover, “Algeria has a very large population and it is expected to build the highest number of desalination and water treatment plants in the near and medium term.  They have the money and they have the stability now.  Egypt on the other hand is stable and it has a high population as well.”  Investors keen on the firm will have to wait, however, as a public launch is not expected until sometime in 2011 at the earliest (Gulf Capital currently owns around 56 percent of shares, and the IFC/World Bank around 7 percent).  But water may indeed be a low-beta proxy on frontier population growth, and the firm’s geographical diversification into China and Indonesia as well as its expertise across the Gulf is also attractive as both a growth and a value holding.