International law firm Allen & Overy advised the world’s largest water company Compagnie Generale des Eaux (CGE) on the public tender of a 49 per cent stake in the Changzhou Municipal Tap Water (Group) Company. This was the conclusion of a 30-year concession agreement with the Changzhou Government, the formation of a Chinese-foreign water supply joint venture company and the conclusion of various ancillary arrangements.
The firm also advised CGE on the establishment of the acquisition vehicle, Veolia Water (Changzhou) Investment Limited, which is a joint venture between CGE and the Hong Kong-listed CITIC Pacific Limited, and finalised shareholder arrangements between the two groups. The 49 per cent stake was acquired at a price of RMB 450,470,000 (approximately $78,540,000).
Changzhou Municipal Tap Water operates five water treatment plants and associated pumping stations and piping networks in Changzhou, which has a population of 1.2 million, and has an aggregate daily treatment capacity of 790,000 cubic metres of tap water.
Corporate partner Kenneth Chan and banking partner Vicki Liu led the Allen & Overy team on the transaction, assisted by senior associate Michael McClean and associates Daniel Duan and Wilson Lo.
Liu said the concession agreement principles agreed by the Changzhou Government and CGE demonstrated the progress that Chinese government entities had made in recognising foreign investors’ need for contractual risk allocation in municipal water projects. “The concession agreement and ancillary documents produce, for all parties concerned, a predictable basis on which the City of Changzhou will receive long-term supply of treated water,” Liu said.