Water-treatment firm opens offering

CT Environmental, a Guangdong-based water-treatment company, started institutional book building yesterday for a long-planned Hong Kong initial public offering.

It hopes to raise HK$673.2 million on the back of increased government spending on environmental protection.

The firm, partly owned by Li Szelim, the chairman of Guangzhou R&F Properties, is looking to expand into the sludge-treatment business, where it would benefit from both government subsidies offered to water-treatment plants and sales of fertiliser byproduct.

"The sludge-treatment business, which represents a minimal contribution to our earnings this year, is expected to account for 20 per cent of overall revenue next year," chief financial officer Ray Sit Hon-wing told reporters yesterday.

Sit also said mainland environmental policy had encouraged the company to start providing sludge treatment to other water-treatment firms. CT Environmental's prospectus says it has "no operational experience" in providing sludge treatment or operating and maintenance services to third parties.

Its chairman, Tsui Cham-to, said water-treatment firms received a government subsidy of 200 yuan (HK$253) a tonne for taking care of tainted sludge.