Metito looks for liquidity overseas

Metito is eyeing new markets in Asia as demand for local water projects wanes.

Metito now considers China to be its biggest short-term growth market, and is pursuing acquisitions there.

Metito, a privately owned Dubai group that designs and builds water treatment plants, is aggressively expanding its operations in Asia and Australia to compensate for slower business in the Middle East and North Africa (Mena) region.

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Water development in the region has slowed since 2008, initially because of low oil prices and the recession and more recently political turmoil, said Fady Juez, the managing director of Metito (Overseas), the group's main operating unit.

Even the UAE, which has so far remained politically stable, has not been entirely untouched by the regional unrest.

"In the boom years from 2006 to 2008, business was coming from all over the UAE," said Mr Juez.

The rapid expansion of the UAE's economy and population contributed to a decision seven years ago to move Metito's headquarters to Dubai from Lebanon, where the 53-year-old enterprise was founded. But the boom was followed by a crash in late 2008, when falling oil prices triggered the global financial crisis.

"In the last two years, most of the local water projects have been municipal or related to oil and gas," said Mr Juez. "Minimal projects have come from the real estate people."

Nevertheless, Metito started picking up more Abu Dhabi business in the first quarter this year, with revenue rising more than 10 per cent from the same period last year to about US$30 million (Dh110.1m).

The company's projects in Abu Dhabi include a wastewater treatment plant for the Ruwais Housing Complex managed by Abu Dhabi National Oil Company. The petroleum group employs hundreds of workers at its joint-venture refinery and petrochemicals plants in the western Abu Dhabi industrial hub, which is undergoing rapid expansion thanks to government investment in the chemicals sector.

In Egypt, another key market for Metito because of the country's high population and urgent infrastructure needs, the outlook is not quite so rosy.

"There are some projects that moved even after the unrest, but most are small to mid-sized projects in the private sector," said Rami Ghandour, the executive director of Metito Utilities.

Most of Egypt's larger government-backed water developments have been put on hold. Investment decisions are not expected until November at the earliest, following the election of the country's first post-revolutionary civilian government, Mr Ghandour said.

In Libya, where Metito was also developing several projects, all infrastructure development has ground to a halt. By contrast in Bahrain, where Metito holds a concession from the government for water development, it is "business as usual", Mr Ghandour said.

He added the group had only minor exposure in Tunisia and Syria and none in Yemen.

Metito now considers China to be its biggest short-term growth market, and is pursuing acquisitions there. "In the next six months, I'd say most of the immediate growth prospects are in China," said Mr Juez.

The company is also picking up water projects related to large Australian gas developments while "aggressively" seeking participation in Indian water projects to supply the local market. For 10 years it has used India as a business hub for developing projects in other countries.

"We are very much a global emerging markets player," said Mr Ghandour. "In five years, we would expect to be all across the emerging markets in this hemisphere. China, India and Indonesia are our most important markets."

But in coming years, Mr Juez expects Saudi Arabia to bounce back as a leading source of new water projects for Metito. The kingdom has a large public sector, and King Abdullah has announced plans to spend heavily on public infrastructure.

Mr Juez expects Egypt to be back on Metito's radar within five years. "It has the largest population [among Arab nations], the largest needs and access to good aid money," he said.

Iraq is another promising prospect. "It's a market which is opening up," said Mr Ghandour. "Obviously we're conscious of the security situation, but overall it's a positive opportunity."

Potential projects include municipal wastewater developments and facilities for treating water used in power plants and oilfields.

Metito has already supplied pre-fabricated water treatment equipment to Iraq from its office in Jordan. The company has not yet stationed staff inside Iraq, but "most of the completed water projects in Iraq, we've done", Mr Ghandour said.

In Abu Dhabi, Metito is eyeing the UAE nuclear programme as a source of future business. Water treatment associated with nuclear plants tends to be complex, said Mr Juez. But he said Metito would bid on contracts.