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Gezhouba plans to buy Brazilian utility

By Ouyang Shijia | China Daily | Updated: 2017-03-31 08:23

A China Gezhouba Group Co Ltd subsidiary plans to purchase a 100 percent stake of a Brazilian water supply company, in a bid to expand its investment in local public-private partnership projects and to improve its presence in the local market.

The Chinese construction conglomerate announced on Thursday that its subsidiary-China Gezhouba Group Overseas Investment Co Ltd-will spend up to $200 million to acquire Sistema Produtor Sao Lourenco.

After the acquisition of the Brazilian utility company, CGGC said it would also be able to acquire the operational rights of the water supply program in Sao Paulo state.

According to the Sao Paulo state government's official website, once completed, the water system will be able to serve 1.5 million local residents.

The company reported on Thursday that its 2016 revenue amounted to 100.2 billion yuan ($14.55 billion), an increase of 21 percent year-on-year. Its net profit reached 3.4 billion yuan, growing 26 percent year-on-year.

Joseph Jacobelli, a senior analyst of Asian utilities and infrastructure at Bloomberg Intelligence, said acquiring SPSL will help CGGC better export its technology to Brazil and will contribute to its earnings.

"Now a lot of Chinese companies, such as CGGC, are expanding their overseas business, which will help them export Chinese know-how and find new markets," he said.

In 2013, SPSL signed a deal with Sabesp, a Brazilian water and waste management company owned by Sao Paulo state. Under the agreement, SPSL planned to build and maintain the local water supply and sludge treatment, earning the rights to operate the system for 25 years.

Having started in April 2014, the project is scheduled to be completed in February 2018 and will come into commercial use by August 2018, CGGC said in a statement.

The company planned last year to buy infrastructure assets in Brazil, through concessions, partnerships or construction projects.

"Our focus is not only on renewable energy, we are also considering Brazil's sanitation and logistics sectors amongst other areas," Lucas Fan, general manager for Brazil of CGGC, said in an interview with the Sao Paulo Times.

Tang Kaiqian, president of the Brazil-China Chamber of Commerce and Industry, said in a local event in Sao Paulo: "Due to the economic and political crisis, the Brazilian assets were valued at a lower price."

Tang added that more Chinese enterprises were targeting the Brazilian market.

Zheng Xin contributed to this story.

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