VA Tech Wabag (WABAG) Investor update summary

Strategic partnership and investment platform

• Announced a partnership with international investors to jointly invest up to $100 million over three to five years, targeting equity requirements for PPP projects in the municipal water sector.

• The platform is structured for Wabag to be a minority investor, focusing on technical expertise while financial partners provide capital.

• The partnership aims to pursue a $1 billion business opportunity in PPP water projects, primarily in India, with selective expansion into Southeast Asia and Africa.

• Financial partners are large, international marquee investors, with details to be disclosed upon definitive agreements.

• Wabag will maintain an asset-light approach, investing a maximum of 26% equity in projects.

Business model and operational impact

• Wabag will act as the technical partner, delivering EPC and O&M services, with all related revenues recognized in its books.

• The platform enables bidding for larger, capital-intensive PPP projects (HAM, BOT, BOOT) without significant capital outflow from Wabag.

• Margins for these projects are expected to be consistent with existing DBO opportunities.

• The typical project funding structure involves 15% equity and 45% debt for the concessionaire, with Wabag contributing as a minority investor.

• The platform is expected to increase the ticket size and scope of work Wabag can pursue.

Market outlook and order book status

• The PPP water sector in India is expanding, with central and state governments initiating major river cleaning and infrastructure projects.

• Wabag has a pipeline of preferentially placed projects, with recent order wins and more expected in the coming months.

• The company is progressing in line with its medium-term outlook for the current quarter.

• International markets, such as Saudi Arabia, remain active, with ongoing bids for large projects.

• Wabag is not exposed to payment delays in the Jal Jeevan Mission, as it does not participate in those projects.