Haier Electronics, a Hong Kong-listed affiliate of Chinese consumer electronics and home appliances firm Haier Group, has agreed to invest about HK$1.65 billion ($211 million) in Chinese water purification services provider Ozner Water International.
Haier Electronics will become the largest shareholder of Ozner upon the completion of the transaction, according to a joint announcement recently filed with the Hong Kong stock exchange.
As part of the investment, Ozner will be positioned as the flagship commercial water purification business platform within the Haier Group. The two companies will join hands in the fields of product development, research and development, distribution, supply chain management such as manufacturing and procurement, as well as services and investment management to provide “round-the-clock safe driving water solutions” to customers.
The strategic cooperation comes as the Chinese water purification market, which is currently in its early development stage, is expected to grow at a very fast pace and reach about 233.2 billion yuan ($33.19 billion) in 2022, according to a Frost & Sullivan report.
The report shows that the retail sales value attributable to water purifiers at commercial premises will increase to 44.0 billion yuan ($6.26 billion) in 2022 from 18.6 billion yuan ($2.65 billion) in 2017, driven by China’s increasing awareness of water pollution, attention to living quality improvement and disposable income.
Ozner, founded in 2005, was the largest water purification firm in China with about 8 percent market share in 2017 based on retail sales value, according to the same report.
The company leverages a “lease plus service” business model to offer customized water purification services to schools, hospitals, hotels, airports, offices and other commercial premises. It has developed a distribution network of over 7,300 distributors and its proprietary service network – a key competitive advantage – covers more than 2,300 cities and counties in all provinces of mainland China as of June 30, 2019, according to the announcement.
Ozner raised HK$1.139 billion ($145 million) in an initial public offering (IPO) in Hong Kong in June 2014. Before the IPO, the company secured $16 million in an equity financing round from Asia-focused SAIF Partners in December 2010.
Haier Electronics, the subsidiary of one of the largest consumer electronics companies in China, has “a strong belief” in the continuous growth of the market. The subsidiary completed the acquisition of a 51 equity interest in Chinese household water purification products provider Qingdao Haishi earlier this year, as the first step in its proposed foray into the market.
The subsidiary completed the acquisition of a 51 equity interest in Chinese household water purification products provider Qingdao Haishi earlier this year, as the first step in its proposed foray into the market.―Deal Street Asia