Businesses cashing in on Cape Town’s water crisis
Two JSE-listed investment companies — PSG Group and Universal Partners (UP) — look set to cash in on Cape Town’s water crisis.
Earlier this month GrahamTek, a desalination and water purification company controlled by PSG’s 53%-held subsidiary Energy Partners, announced it had clinched a R5bn contract to build a desalination plant in Saudi Arabia for the Saline Water Conversion Corp.
While this development is great news for PSG, it seems GrahamTek could turn on the profit taps in Cape Town too. The company has bid for contracts to supply the city with desalination plants as part of ongoing efforts to secure alternative water sources to ensure taps don’t run dry before the onset of winter rain.
The adjudication process is currently under way.
GrahamTek CEO Julius Steyn believes the company’s desalination technology — which revolves around reverse osmosis — is ideally suited for the SA environment.
GrahamTek already has a plant ready and available for local use, and Steyn says the company is investigating alternatives beyond the public sector.
Given PSG’s knack for backing businesses in niches in which government services are insufficient — for example, low-cost mass banking (Capitec) and private education (Curro and Stadio) — it seems logical that GrahamTek could look to offer customised desalination solutions to Cape Town businesses.
Companies within PSG’s sprawling investment portfolio might be the first to use such services.
In another water-related development, UP — an investment company focusing on UK and European opportunities — is making progress with its investment in Propelair.
Last July UP, co-investing with Investec Investments UK, pumped £1m into Propelair in exchange for a 13% stake in the water-efficient positive-pressure flushing toilet specialist.
UP says Propelair is likely to require expansion capital, which will provide an opportunity to boost its shareholding to about 25%.
Propelair has already been appointed by Moto group, an operator of service stations in the UK, to install more than 1,000 units. Other customers include McDonald’s, Barclays and Thames Water.
With UP facilitating introductions, Propelair presented its solutions to the largest property owners in Cape Town in November.
UP says a number of water measuring trials have commenced in Cape Town. These will be followed by Propelair trial installations in selected office buildings and shopping centres in the first quarter of this year.