A new holder for SMVAK, a new potential partner for Penta

Penta Private Equity Group agreed today to sell its 98.5% stake in Severomoravské vodovody a kanalizace (SmVaK) to Aqualia, a Spain-based, wholly owned subsidiary of FCC, specialised in public services and construction. The investment is valued at 248 million euros.

In 2006 SmVaK expects to report turnover of 57 million euros with EBITDA of 27 million euros. The investment includes a net financial debt of 79 million euros and represents a company value/EBITDA multiple of 9.1 times.

The transaction establishes grounds between Penta, Aqualia and SmVaK for potential future collaboration in the water-supply markets of Central and Eastern Europe. Currently involved in advanced stages of developing water-supply projects in Russia and Slovakia, Penta intend to continue their successful collaboration with SmVaK and further leverage the knowledge, experience and know-how of SmVaK’s Ostrava-based management team.

“We only agreed to sell SmVaK after receiving a number of favorable offers from all the investors contacted in our efforts to find a collaborating partner for the water-supply industry. We hadn’t planned to sell our stake at this stage, yet the price, combined with the potential future collaboration with Aqualia, proved to be the most beneficial option for all parties,” said Martin Kúšik, a partner in Penta, adding, “We’re considering water supply an extremely interesting business – we’re currently developing several promising projects at home and abroad.”

“Working with Penta to restructure SmVaK was a great experience; for example, we have managed to identify business savings that went beyond our expectations,” said Miroslav Kyncl, CEO at SmVaK.

Martin Kúšik added, “How well we worked with the SmVaK management team is best evidenced by our joint plans for the future. I would also like to point out how important it is for companies such as SmVaK to maintain good relations with the local municipalities. I believe that all parties have successfully met their obligations in this area, too, and their experience with each other has been positive.”

FCC is the parent company of one of the leading construction and service groups in terms of both business volume and profitability. Its growth strategy was originally oriented towards diversification, as is shown by the fact that as early as 1911 the company, originally a construction firm, started its business in the field of public services with a contract to clean and maintain Barcelona’s sewage network. Today its production is highly diversified, since 53% is in sectors other than construction, notable amongst which are solid waste collection and disposal, street-cleaning, water supply, maintenance of drinking and waste water treatment plants, cement manufacture, real estate development, parking, urban furniture and fixtures, passenger transport, official vehicle inspection, airport handling, etc. FCC is the out-and-out leader in the Spanish urban sanitation market and is acquiring an increasing presence in international markets.

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