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How EUR5m can Provide Millions of People with Clean Drinking Water and EUR21m in Profits over 4 Years March 9, 2010

Posted by Barry G Russell in Business, environment, Investment.
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Background

One of the world’s most critical shortcomings is that 1.2 billion people – almost one-fifth of its population – do not have access to drinking water. Indeed, one of the United Nations most highly publicised Millennium Goals is to half that number by 2015. 

While the humanitarian imperative is obvious, the implications for the global economy are staggering. People who consume dirty water get sick and are unproductive: they go to hospital and require the attention of doctors and nurses and often need to be transported to and from remote areas. Because of this the UN’s World Water Development Report 3 emphasised that investment to improve drinking water and water resource management systems makes strong economic sense: “… every dollar invested leads to several dollars in benefits”.   

Despite the worldwide consensus that urgent action is needed, governments and healthcare organisations agree that problems caused by polluted drinking water are increasing on a daily basis. Existing solutions are expensive, slow to implement and often low on effectiveness: 

  • Large-scale water purification plants in towns and cities have to use existing pipe infrastructure which is often prone to damage and leaks, which means that water supply is not 100% clean
  • Small-scale units set up to clean specific types of water, which require frequent maintenance and in most cases can only be operated by one individual at a time.      

A team of distinguished Scandinavian biotechnology experts, led by a CEO with an established start-up-to-IPO track record, has developed a mobile water purification solution, Only WaterTM, that can transform the supply of drinking water to people in the developing world, to people in need following natural disasters and which has enormous commercial potential for use by hotels, hospitals and military units. 

Key Facts

  • The Only WaterTM unit is manufactured within a standard 40-foot container, which means that it is easily transportable to almost anywhere in the world
  • It can be positioned close to any water supply, such as a borehole, river or lake and immediately produce clean drinking water, no matter how polluted the source, including salt water intrusion into ground water supplies, dirty surface water from rivers and lakes, and water contaminated by fertilisers, pesticides and viruses
  • Unique, patented self-cleaning technology means that an Only WaterTM unit can run for six months with little or no maintenance, unlike any of the alternative water purification solutions currently available
  • Energy consumption is low, at approximately 1.5KWh per cubic metre of clean water
  • Capital outlay is low, at $350,000 per unit
  • A single Only WaterTM unit provides enough clean water for drinking and personal hygiene for 25,000 people per day 

The Market for Only WaterTM

The initial focus is on three market segments with cautious projections for market penetration. 

1.       Surface Water

  • Affects approx 1.1 billion people primarily in Africa, the Middle East and Asia
  • Potential market of 300-500 Only WaterTM units annually with 2% market penetration 

2.       Brackish/Salt Water Intrusion

  • Affects approximately 360m people primarily in the Middle East and Mediterranean
  • Potential market size of approx . 150-200 Only WaterTM units annually with 2% market penetration 

3.       Emergency Water for Disaster Areas

  • Affects approximately 240m people globally each year
  • Potential market size of 100-200 Only WaterTM units annually with 5% market penetration 

Financials

Funding for development so far has come from the EU, under the 7th Frame Program and from the Danish Foreign Ministry, Danida and equity investment of EUR5m is now required to commercialise the project. 

The proceeds of the equity will acquire a 40% equity stake in Only Water South East Asia and be used as follows: 

  • EUR2m to fund the assembly of eight Only WaterTM demonstration units
  • EUR1.75m to fund the build-up of the necessary organisation and infrastructure
  • EUR1m to provide working capital to fulfil the first orders of Only WaterTM units
  • EU250,000 to fund completion of the EU Only WaterTM demonstration unit 

Break even is at annual sales of around  75 units. With production set up to manufacture 500 units per year in China, cautious Year 4 projections for 400 sales would produce an operating profit of EUR21m (US$32.3m). 

An exit via a market flotation would be sought from Year 3 onwards. 

Contact Barry Russell, a consultant to Amren & Partners, for further information and access to detailed financial projections and a meeting or conference call with EMF Envirotec CEO, Michael Wolff Jensen 

Email                     bgrcapital@gmail.com

Telephone          +852 6383 6285 

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Comments»

1. Too Late for Haiti: the Life-Saver in a 40-Foot Container « Barry Russell - March 15, 2010

[…] so I guess if I really want to do something good for planet I need to get that money raised and Only Water launched fast […]


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