Firm tasked with cleaning up one of China’s most polluted lakes plans US$210m Hong Kong IPO
The company tasked with cleaning up one of China’s most polluted lakes will soon go public in Hong Kong, hoping to leverage a multibillion dollar sewage treatment industry that grew out of the need to clean up the country’s environment.
Kunming Dianchi Water Treatment plans to raise as much as HK$1.6 billion (US$210 million) in its initial public offering on Friday, while its chairman Guo Yumei promised in a briefing to set aside at least half of its net profit for the coming two years as dividends, citing its benign financial position.
“One of our chief businesses is to fight pollution in Dianchi [lake] and the knowledge we have gained in sewage treatment over the years allowed us to branch out to other parts of China and Southeast Asia for new projects,” said Guo.
China’s rapid ascent to global industrial superpower over the last four decades has ravaged the environment, a situation that is taking decades and a sky high sum of money from government’s budget to reverse. Dianchi, a large body of water south of Kunming city in southwest Yunnan province, is among the biggest casualties.
Since the early 2000s, authorities have spent at least 30 billion yuan (US$4.3 billion) on cleaning up the stinky lake, which was named by Beijing as one of the top three most severely polluted lakes in China – the other two being Tai and Chao.
An estimated 90 per cent of Kunming’s wastewater, including from factories and farms, was pumped into the lake without repercussions until the first water treatment plant was installed in 1989.
Once nicknamed the “sparkling pearl embedded in a highland”, Dianchi has had its water quality rated Grade V, the most degraded level that is even deemed unfit for industrial use. Green algae blooms blanketed large areas of the water for years, killing many of the fish in the lake.
However, there are signs that efforts to fight the pollution are starting to pay off as the water quality of the lake was upgraded in January – the first time in two decades.
The state-backed company that traces its roots back to the first sewage plant in Kunming accounts for 34 per cent of the wastewater treatment capacity of Yunnan, with its gross profit for 2015 coming in at 378 million yuan, up 3.6 per cent from a year earlier. Dianchi will price its 339 million shares at between HK$3.91 to HK$4.7, with its trading debut set for April 8.