March 22, 1999

Enron seeks IPO

Monica Perin   Houston Business Journal

International energy player Enron Corp. is seeking to clone its pattern of success in the global water and waste-water industry by taking its Azurix Corp. subsidiary public.

Created last year, Azurix has filed with the U.S. Securities and Exchange Commission to go public through a concurrent U.S. and international offering of stock expected to raise from $350 million. The maximum offering amount listed in SEC documentation is $862 million.

Azurix will compete in acquiring, owning, operating and managing water and wastewater plants and infrastructure, a global industry estimated to produce $300 billion in revenues annually.

Enron is a leading integrated supplier of natural gas and electricity. Following the international trend of privatization in the electricity, gas and telecommunication industries, many governments worldwide are turning to the private sector to own, operate and manage their water and wastewater assets and services, the Azurix filing states.

Governments in South America, Germany, Indonesia, Mexico and the United Kingdom have privatized their water industries, while some 380 water and wastewater projects currently on the drawing boards will involve the private sector. These projects, located around the world, add up to about $74 billion.

Azurix officials, who are evaluating about 70 announced projects, believes that municipalities and industrial companies in North America and Western Europe in particular will increasingly seek to outsource the management of their water and wastewater systems.

Last year the company made its first acquisition, Wessex, a water and wastewater company in southwestern England, for $2.4 billion. It also initiated the acquisition of a water concession in Cancun, Mexico, a deal expected to close this month.

The company, with pro forma revenues of $464 million, also owns an interest in a water concession in Argentina.

Azurix has a management team composed of top Enron and Enron affiliate executives. Chairman and CEO is Rebecca Mark, who is vice chairman of Enron and was previously chairman of Enron International and chairman and CEO of Enron Development Corp.

The company's chief financial officer is Rodney Gray, formerly executive vice president for finance of Enron International and chairman and CEO of Enron Global Power & Pipelines.

Former Vinson & Elkins law firm partner John Ale is general counsel and executive director of Azurix. Ale most recently was managing partner of the London office of Houston-based Vinson & Elkins.