Utililty IPO: Cascal

Cascal (HOO) is a company that provides water and waste-water services in eight countries.

All quotations are from the company’s most recent F-1 filing with links provided.

Business Overview (from prospectus)

We provide water and wastewater services to our customers in eight countries: the United Kingdom, South Africa, Indonesia, China, Chile, Panama, Mexico and The Philippines. In a typical water project, we collect raw water from surface and groundwater sources, treat the water to meet the required quality standards and then supply the treated water through a distribution network to our customers’ premises. In a typical wastewater project, we collect the wastewater from our customers’ premises, treat the wastewater to meet the required standards and return the treated water to the environment. We provide these services under long-term contracts or licenses that typically give us the exclusive right to provide our services within a defined territory. Our customers are predominantly homes and businesses representing a total population of approximately three million.

Offering: 16.7 million shares at $17.00 per share. Net proceeds of approximately $129 million will be used for repayment of debt ($77.4 million), project acquisition and/or dev., general working capital, and for payment of the estimated balance this offering expenses.

Lead Underwriters: JP Morgan, Credit Suisse

Financial Highlights:

Revenue increased by $20.4 million from the six months ended September 30, 2006 to the six months ended September 30, 2007 at constant exchange rates due primarily to our recent acquisitions… Raw and auxiliary materials and other external costs increased by $5.9 million from the six months ended September 30, 2006 to the six months ended September 30, 2007 at constant exchange rates, in large part due to the recent acquisitions… Staff costs increased by $5.0 million from the six months ended September 30, 2006 to the six months ended September 30, 2007 at constant exchange rates, primarily due to the recent acquisitions… Depreciation and amortization of intangible and tangible fixed assets and negative goodwill increased by $2.3 million from the six months ended September 30, 2006 to the six months ended September 30, 2007, at constant exchange rates, partly due to our recent acquisitions… Other operating charges increased by $4.4 million from the six months ended September 30, 2006 to the six months ended September 30, 2007 at constant exchange rates, primarily due to our recent acquisitions… Interest (expense)/income and exchange rate results changed by $6.2 million from the six months ended September 30, 2006 to the six months ended September 30, 2007 at constant exchange rates. The overall effective tax rates for the six months ended September 30, 2006 and the six months ended September 30, 2007 were 35.1% and 52.3%, respectively.

Competition:

Water and wastewater services are predominantly undertaken by governmental entities. In 2007, the private sector was responsible for only approximately 11% of the world’s water and wastewater services, a percentage that is expected to increase to 16% by 2015, according to Pinsent Masons Water Yearbook 2007-2008. Although there is private-sector participation in only a small percentage of the total market, there are industry competitors ranging from multinational water companies such as Veolia Environnement (VE) and Suez S.A. (SZEZY) to local and regional firms. We estimate that there are at least 60 countries where the private sector has been engaged in the provision of water or wastewater services.

Additional Resources:

• Company Website
• On-line roadshow
• AP: 'UK's Cascal unit China Water to take 49 pct of water services JV in Jiangsu'