Seeking sustainable solutions
info exchange
Finding solutions
Progressive approach
Hundreds of specialists, academie experts and top government officials gathered
in The Hague this month for the World Water Forum. Chaired by crown-prince
Willem Alexander, it was former Russian president Mikhail Gorbachev who aptly
summarized the theme running through the Forum:'an old Uzbek proverb has it
that "where water ends, life ends" Water is the blood of life.'
Active involvement
Taking action
Wh at S NewS Issue 2 March 2000 I
Global water use has increased three-
fold in the last 50 years and the avail-
ability and quality of water is increasingly
under strain. Even if conditions remain
constant for the foreseeable future, ntuch
of the world will find itself in a state of
water-related pressure. To make the
pressure stronger, population growth is
most rapid in precisely those areas where
water is already in scarce supply.
Rabobank is acutely concerned with these
developments. Water is fundamental to
the entire F&A cyele and it is essential to
the well-being of people. Without access
to adequate supplies, our elients' busi-
nesses would quickly wither away, taking
with them the prosperity of the bank as
well. An awareness of our mutual depen-
dence on water thus stands at the core of
what we do. At the santé time, a world-
wide privatization trend boosts the need
for private investment and a stronger role
for private banks. Both phenomena are
catalysts for the growing interest in the
water sector throughout the Rabobank
Group as a whole.
This explains why we played a role at the
World Water Forum, which was specifi-
cally convened to discuss what steps need
to be taken in order to avert a water crisis.
The basis of the talks was a study, 'Vision
and the Framework for Action,' which
was painstakingly developed over the past
two years by a host of international
experts. An outgrowth of these discussions
was an agreement that visionary ideas
require concrete action before they can be
translated into reality. Moreover, an
awareness that the private sector, and the
financial industry in particular, will play a
crucial role in conceiving and executing
eventual solutions.
The Rabobank Group was represented at
the meeting by Jean-Pierre Sweerts,
manager (water sector) for the Rabobank
Group. Sweerts underscored our commit-
ment to deliver financial services to a host
of elients in this sector including water
companies, treatment operations, industry,
and the F&A sector. These service are not
limited to project finance alone hut
include structured finance, mergers
Gorbachev - fighting for water awareness
acquisitions (M&A), tax-based structures
and other related packages. The orienta-
tion is both commercial and pragmatic,
and the approach is to progressively move
up the value change and deliver value to
our elients, most of whont are banked by
R1 and/or local banks, both in the Nether-
lands and abroad. As Sweerts points out,
'ample supplies of clean water, waste
water treatment, and water processing for
food and other industries will all represent
profitable, high-growth markets over the
next 20 years, partieularly as populations
and economies grow and the demands on
our finite water resources increase.
We aim to carve out a substantial role for
ourselves as financiers in this field.'
We have already developed close relations
with many of the water companies and
water boards in the Netherlands, have
been actively involved in cross-border
leases for waste treatment plants, and
have been in the forefront of environmen-
tally green funding schemes. This provides
ample scope for growth to Rabobank
Nederland affiliates including Interpolis,
De Lage Landen, Robeco, and the local
banks as well as Project Finance within
RI, all of which can leverage knowledge-
and relationship-intensive capabi 1 ities at a
time when the water supply industry,
following on the privatization trend in
energy and telecom, emerges as a new field
of opportunity. Substantial investments
will be required to meet anticipated needs.
For example, on the European market
alone, annual investments of some
USD 10 to 50 billion are forecast through
the year 2010, and privatization will be
accompanied by an acceleration in M&A
activity as well as the formation of multi-
utility conglomerates combining water
with telecom, energy, transport, etc.
Among the success stories in recent
months is our formulation of a special sale
and lease-back structure that delivered
tangible fiscal benefits to a joint venture
formed by Delta Nutsbedrijven for chemi-
cal waste-water purification for Dow
Benelux and IJS Filter. Acting together
with other partner banks, we were a prime
catalyst in the speedy closure of a deal
that enabled AVR, a municipally-owned
wastewater treatment company in the
Netherlands, to syndicate its holdings and
take them off balance sheet. AVR inciner-
ates caustic water produced during the
production of feedstocks for polyurethane,
plastics, and rubber, as well as delivering
distilled water, an important feedstock to
the chemicals industry. Finally, as the
traditional structures for delivering fresh
water and water treatment give way to
new methodologies, we are in the
forefront of the prequalification phase
(together with Vivendi and other Dutch
companies) for a place in the Harnasch-
polder project, an important but as yet
unfinalized initiative that may well set an
example for a new public/private sector
cooperation in this field.