Tuesday, May 18, 2010
"Investing" in Water
TAHAL, the Israeli water planning company, has been searching for capital to expand in the global water infrastructure market. Today it was announced that investment fund FIMI will lend Tahal $50 million. The loan is to be repaid in four years and bears an interest of six month Libor plus 3%. On the basis of the letter of intent, Tahal will issue warrants to FIMI, which allow FIMI to purchase shares in Tahal.
Is that an investment or a LIBOR + 3% loan? It seems expensive. I take it as a sign that the water business in the Third World is not such an attractive business. The fact is that TAHAL is unprofitable.