The True Value of Water with RWL Water’s Henry J. Charrabé

July 28, 2015

John Shegerian: Welcome to another edition of Green Is Good. This is the Houlihan Lokey edition of Green Is Good, and we are here in beautiful New York City today, and we are so honored to have with us today Henry Charrabé. He is the President and CEO of RWL Water. Welcome to Green Is Good.

Henry Charrabé : Thank you. Thanks for having me.

John Shegerian: Henry, before we get talking about RWL Water and all the great things you’re doing to make the world a better place, can you first share a little bit about your journey leading up to running this great company?

Henry Charrabé : I was born and raised in Berlin, Germany.

John Shegerian: OK.

Henry Charrabé : I came to the U.S. in 1998 and soon thereafter – actually in 2001 – I started working for Ambassador Ronald Lauder in a personal capacity, and then over the last 14 years, in all sorts of different environments. At one point in 2010-2011, he said “Henry, I really want to get into the water space, why don’t we come up with a strategy and find a way that we can do well while doing good?”

John Shegerian: Wow. So “RWL” is for Ronald Lauder.

Henry Charrabé : That’s right.

John Shegerian: Wow. And for our audience out there, to learn more about RWL Water, please go to www.RWLwater.com. So water is such a hot topic now, Henry. I have a home in California and our business is based out of California, but wherever you go people are talking about – whether it’s what kind of water to drink or a drought or on so many levels – what is going on now? Where do you fit in? Where does RWL see its value proposition to make the world a better place?

Henry Charrabé: So that’s a very open-ended question.

John Shegerian: Yeah.

Henry Charrabé: But to drill it down, I think RWL Water was created because in the late 1990s and early 2000s we had an acquisitions spree that created three giant water companies.

John Shegerian: OK.

Henry Charrabé: GE Water.

John Shegerian: OK.

Henry Charrabé: Veolia – the world’s largest – based out of France. And Siemens Water – now called Evoqua. And so what happened is they basically created a void in the middle market where we are focused.

John Shegerian: OK.

Henry Charrabé: So projects, between $5 to $50 million, where we are working worldwide to treat municipal as well as industrial clients’ water both on the freshwater and wastewater side.

John Shegerian: Wow.

Henry Charrabé: So we have a different approach and I think globally speaking we have a great footprint and are one of the few companies that also offer project finance rather than the customer having to buy a $20-, $30-, $40-million plan outright on capex.

John Shegerian: Yeah.

Henry Charrabé: We finance it and they can buy it over the use of the water, over 20 years like you would do with your car.

John Shegerian: Wow. Or with a solar.

Henry Charrabé: Or your mortgage.

John Shegerian: Right. Solar.

Henry Charrabé: And then solar – obviously – is the idea behind that energy.

John Shegerian: Right. So share with our audience a little bit, what are some of the common misconceptions that are out there right now about water and the problems that are surrounding water?

Henry Charrabé: I think the biggest misconception is that we are waiting for this great breakthrough technology. I think all the technologies out there are available are tested, proven. Of course, you can always enhance it, and the biggest problem is energy efficiency, but we do not have to worry anymore about having to treat water. Any body of water anywhere in the world can be treated to drinking water standard. The problem is money. The problem is who is paying for it, how do you finance it, how do you make it available to those who have the least, and how do we make sure that we value that water and don’t just deep-well inject it into the ground or let it go to waste but really reuse it.

John Shegerian: So recently, I was reading in California, which of course is under massive drought stress right now, down in San Diego, they’re building this large desalination plant. Is that a solution for our water problem or does that create other inefficiencies?

Henry Charrabé: Well, I think desalinization is definitely a solution.

John Shegerian: OK.

Henry Charrabé: It can be one of a spectrum of solutions especially for areas – obviously – that have a drought like California.

John Shegerian: Right.

Henry Charrabé: Close to the coast, that’s a great source of water, if you know how to build it efficiently and make sure that – I think – rather than building one or two large plants decentralized plants of a smaller size make more sense, so you don’t have to pump and use electricity to them get water from place A to place B. But we have come up with smaller packaged water treatment plants that allow you to be close to the customer, so you don’t spend more money and more energy just pumping it through a sometimes very old network.

John Shegerian: So you’re up against big boys – Siemens, Veolia, GE – but you’re going after the middle market. Share with our audience a little bit some of the types of projects that you focus on and how can you create public/private collaborations that then can make their community – the world – a much more sustainable place.

Henry Charrabé: Right. So I think we can separate between two – the municipal side with the public/private partnerships and the industrial side.

John Shegerian: Right.

Henry Charrabé: So the biggest project today we have done is with Pacific Rubiales Energy – the largest Latin American oil and gas producer in Columbia. We’re re-treating 500,000 barrels per day of produced water – that is about 80,000 cubic meters a day – and more than 90 percent of that we reuse for irrigation. So the water that used to be just deep-well injected, like we do in the U.S., we are reusing for irrigation purposes, which makes all the sense in the world, and I think we ought to do that everywhere.

John Shegerian: Wow.

Henry Charrabé: That’s just on the industrial side. Now on the municipal side, the public/private partnerships – I think – are important where municipalities and states and state governments get involved and basically guarantee an off-take in which we then propose a solution, and all we want to make sure is that we have a guaranteed partner at the other side that makes sure that we get paid over 20 years, and I think that is very important, especially when you want to bring in private industry and don’t have the money from the public side to invest is just to make sure that you have a guaranteed off-take for long term so that you and I would put our money to work.

John Shegerian: When you wake up in the morning what is your marketplace for RWL? I mean it sounds like you could do projects here in the U.S. but the world is your marketplace really.

Henry Charrabé: Right.

John Shegerian: So how do you approach that?

Henry Charrabé: That’s the focus that we have to have.

John Shegerian: Yeah.

Henry Charrabé: Well, the U.S. is a great place especially now on the back heel of the fracking business and all the industrial expansion that we have and the great economic situation that some areas of the country are in. From the municipal side – obviously – we focus on Latin America and the Middle East. You have scarcity of water, you have sophisticated clients, you have money available and a competitive landscape that I think is advantageous to us because we work in that middle market.

John Shegerian: Go back to fracking here. Does fracking create opportunity for your company to come in and do reuse without water?

Henry Charrabé: We don’t focus on fracking.

John Shegerian: OK.

Henry Charrabé: But what fracking does create is it creates economic mobility. For example, Corpus Christi is the 10th fastest growing city in the United States right now because of the frack business. Other industries – plastics, aluminum – grow. They need water. They don’t have water – there is a drought in the southwestern United States – they come to us.

John Shegerian: Got you. How many other companies like RWL are chasing the middle market space and how do you then differentiate yourself from those other competitors?

Henry Charrabé: Well, first of all, I would say that we are always more customer-focused.

John Shegerian: OK.

Henry Charrabé: But I think, globally speaking, we are the only company that really deals with the middle market. Obviously, the companies you mentioned earlier could compete.

John Shegerian: Right.

Henry Charrabé: But they are likely going after the waste water treatment plant of the City of Chicago, which we don’t.

John Shegerian: OK.

Henry Charrabé: But then you have regional players. You have players in Asia that are very strong in that mid-market but regionally. Players in the Middle East that are very strong but in that region. You have other U.S.-based companies that are very strong – for example – in India. I think, globally speaking, with the project finance and the suite of technologies that we offer, we’re pretty unique.

John Shegerian: Talk a little bit about your technologies. What would be the suite of technologies that you offer, if I’m a municipality or if I’m an industrial potential client? Is there anything you can’t offer? And how big is the range of opportunities when it comes to water reuse?

Henry Charrabé: So I think, in general, we can offer everything.

John Shegerian: OK.

Henry Charrabé: Because the systems integrate us. But our core are the four companies that we acquired. So an Israeli-based company that focuses on desalination and membrane technology for brackish water and desalinization. We have an Italian company that focuses on industrial wastewater, where they take out organic matter of industrial wastewater, like in slaughterhouses or breweries, and turn that into a methane gas that becomes electricity.

John Shegerian: OK.

Henry Charrabé: Or you have the domestic waste water division here in the United States that focuses on sewage. When it comes to reuse, it all depends ultimately on price. I mean, economics is the key here. You have to make sure that whatever you offer the client at the end of the day saves them money and makes sure that there’s an economic value proposition then for them to recycle or reuse that water.

John Shegerian: When you talk about reuse water, you talked about one of your projects where it’s going now to irrigation.

Henry Charrabé: Yes.

John Shegerian: What percentage of the projects that you are doing are reusing it and going back to irrigation? What percentage are going back and actually going back to become drinking water?

Henry Charrabé: Drinking water, very few because there still seems to be an apprehension.

John Shegerian: Right.

Henry Charrabé: But the water that we normally would use to irrigate we can now use to drink.

John Shegerian: Wow.

Henry Charrabé: So it becomes a cycle in which if you used our water to irrigate, then you have more water to drink that most people feel more comfortable comes out of the faucet. But we have two projects in Cyprus – for example – 50,000 and 23,000 cubic meters a day where our water comes directly from the Mediterranean Sea and goes into the Episkopi drinking water system.

John Shegerian: Wow. And so is that considered a classic desalination deal?

Henry Charrabé: Yes, sir.

John Shegerian: And then recently about three or four months ago Bill Gates was famous or infamously on the Jimmy Fallon Show doing his “poop water” discussion. And I only bring that up, even though it’s funny and cute, really your technology is such – we were talking off air before we sat down together – you can also reuse “poop water.” You have projects. You have the technology to do the same thing he’s doing.

Henry Charrabé: Absolutely. I think Bill Gates’ attention to this problem and to make everybody aware is the right thing to do. However, as I said earlier, the technology is there. We’ve built the largest packaged wastewater treatment plant for the U.S. Army Corp of Engineers in Camp Victory in Iraq where the U.S. Army’s poop was recycled – if you will – and make sure that we leave the place in better shape than when we get there. So obviously, this technology is out there and it always becomes the question of who is paying for it.

John Shegerian: Talk a little bit about working with the Lauder family. Obviously, from your initials, RWL – I didn’t know that’s who you were working with – but then once that becomes known, how does that help you socialize your technology faster and get your technology out into the world to make the world a better place faster being that you have investors and owners like the Lauders?

Henry Charrabé: I think the biggest benefit for us is the credibility. Everybody knows that Ronald Lauder would not put his name to anything that is not accurate. We are not a fly-by organization that we are not there long-term and that we wouldn’t offer technology that is not worthwhile.

John Shegerian: Right.

Henry Charrabé: So I think for a new company to have that credibility and that name behind us is tremendously helpful. Also, Mr. Lauder’s involvement personally in speaking to heads of states or industrial leaders and promoting or help us introduce us to certain projects is definitely a great advantage.

John Shegerian: And for our audience members that just joined us, we’ve got Henry Charrabé. He is the President and CEO of RWL Water. To learn more about RWL Water, go to www.RWLwater.com. This is a relatively new company, and this issue is getting more and more publicity. What does the future look like for RWL Water, and what are your goals in the coming two to three years?

Henry Charrabé: So we are about four-and-a-half-years old, which in the water industry, if you look at our competition, is a nanosecond.

John Shegerian: Right.

Henry Charrabé: People have been around for 20, 50-on years.

John Shegerian: Right.

Henry Charrabé: So for the next two to three years, we’ve now seen a very nice uptake in projects. People have come to know us. We – I think – created a great team and now have the capability to execute those projects, so I think the next two to three years actually are surprisingly positive the way I see them. Then it depends on, ultimately, the sole shareholder – Mr. Lauder – exactly how he wants to continue to build this company. But I think the future is very bright.

John Shegerian: How many employees do you have right now?

Henry Charrabé: About 250 worldwide.

John Shegerian: Worldwide. And you have offices here in Manhattan and where else in the world right now?

Henry Charrabé: So the four portfolio companies are in the Mar de Plata outside of Buenos Aires in Argentina. In northern Israel. In Padua which is by Venice in Italy. And in Minneapolis here in the U.S. Then we have sales offices in Dubai, soon Egypt, Chile, Colombia and Mexico. And SoHo.

John Shegerian: Wow. Any last thoughts for our audience members before we sign off today with regards to the opportunities that exist? Although, the news loves to report bad news, because bad news seems to sell more than good news the good news is that companies like your exist. Technologies to face some of the biggest issues that we now have in water exist, and there is a lot of hope out there. Is that not true?

Henry Charrabé: Yeah. I would say if we put our minds and our efforts to it – the technologies – they do solve all the water and waste water problems. It’s important that we vote for officials who are happy to come up with water strategies beyond their cycle as politicians so we can invest into projects that will maybe take four, five, six, seven years and don’t only look to be reelected next year – I think that’s important – but that we certainly have the availability, the capability and the access to solve all that if we have a strategy surrounding it.

John Shegerian: That’s great. Well, thank you for your time today. For our audience members out there – again – to learn more about RWL Water or to contact Henry, it’s www.RWLwater.com. Henry, your company and you are an inspiring innovator, sustainability superstars and truly living proof that Green Is Good. Thank you for joining us today.

Henry Charrabé: Thank you very much.

John Shegerian: Thank you.