Hydrology plc, the UK based water product development and services company, has signed a 10-year contract with Brazilian industrial conglomerate Unigel to deliver fresh water to its petro-chemical plant.
Under the terms of the agreement, Hydrology, which is quoted on the Cyprus Stock Exchange, will finance and build Unigel a desalination plant to treat water from the São João river. using reverse osmosis and bio-digester technology.
With development costs of around £800k and generating annual cash of circa £250k, the contract has an IRR of 22.75% and an anticipated payback period of three years.
Based in São Paulo, Brazil, .Unigel is one of the largest producers of specialty chemicals, fertilisers, plastics and packaging in Latin America. It is a major producer of styrene and polystyrene with 12 production sites and seven distribution centres in close proximity to clients’ facilities in Brazil and Mexico.
Ability to combine financing with expertise is gaining significant traction in Brazilian industrial sector
Commenting on the deal, Hydrology CEO Chris MacNee said:
“Working with one of Brazil’s largest industrial corporations, Unigel, has been a great opportunity for us for two key reasons: the project is expected to be paid back within three years and is forecast to generate significant cash for Hydrology to reinvest in future projects; and secondly it has enabled us to demonstrate our technical and financial prowess, which we hope will raise our profile in the country and generate additional partnerships."
“With 400 of the world’s 500 largest companies operating within it, Brazil offers many opportunities. Of late, there has been a lack of loan and equity financing available to corporates; the ability to combine financing with expertise is therefore gaining significant traction in the Brazilian industrial sector. As a result, we are delighted to be strengthening our foothold in the country and look forward to updating shareholders on progress with our healthy pipeline of new business leads.”
In June Hydrology opened a new office and hired a team in Brazil as part of its ongoing expansion in the region. The new operation, established officially in May, is led by General Manager, Joao Batista Meirelles who has overall responsibility for the strategic development and implementation of the company’s projects in Brazil.
Chris MacNee said:
“Brazil is a very significant market for us and establishing our operation with such a strong local management team is an important element of our business growth in the area. There is a growing demand for companies who can provide water treatment solutions on a commercial scale and we now have the expertise and local knowledge to take advantage of these huge opportunities.”
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