MOYA: Economies of scale from Acuatico merger

Many Indonesians suffer from irregular access to water. The government aims for all Indonesians to have access to clean water by 2019. This requires more than Rp660 trillion (S$66 billion) of investments. (Photo: Water.org)

Moya Holdings Asia, a water treatment player in Indonesia, collects raw water from sources (e.g. river or reservoir) provided by the local government authority, pumps it into its treatment plants, and delivers clean water through a network of pipelines to homes and businesses.

Access to piped water supply in Indonesia is very low relative to what it should be. The Indonesian government is pushing for piped water to be universally accessible across Indonesia.

- Simon Melhem
Executive Director

Moya Holdings Asia

(Photo by Sim Kih)

Q: What is your cost of debt? Do you plan to restructure it?

The acquisition loan was in USD with a cost of debt at 4% to 5%. We are going to restructure this loan to Rupiah so that we don't have exchange rate risk on the loan.

After we restructure the loan, we may use cash on hand, do a perpetual instrument or have other exercises to reduce our debt servicing burden.

I believe it is meaningful to do a blended perpetual loan with tranches in both Singapore and Indonesia. Because we do not pay the principal for the perpetual loan in the near term, our cash flow is freed up. I believe the benefits arising from the excess cash flow will more than mitigate our risk of Rupiah devaluation against the SGD.

Q: Do you have plans to raise fresh equity?

Any equity issue that is not a rights issue will be at a much higher price than the current trading price.

Q: Are foreign water treatment companies allowed to operate in Indonesia?

Yes, they are -- as long as there is local ownership of at least 5% in the project.

Q: Do you face competition from large foreign players?

Many foreign players are attracted to Indonesia because of headline figures such as its huge population and low penetration rate. However, none of them are willing to undertake work for pipe installation because of the project risk involved.

Our pipe installation project in Tangerang City is a pilot commercial project in Indonesia and is becoming a demonstration project for players in other cities. We are aiming to install 60,000 new customer connections. That scale of pipe connection hasn't been done in the country in a long time.

Our foreign competitors do not have the local know-how and local infrastructure to undertake this kind of work. Local players are much smaller than us. They are averse to the risk associated with pipe installation projects.