For Immediate Release

May 30, 2018
Company Name:
Representative:(Securities Code:Contact:(Tel:Kurita Water Industries Ltd.
Michiya Kadota, President
6370, First Section of TSE)
Hisashi Tanabe,
General Manager of Corporate
Planning Department+81-3-6743-5492)

Notice Regarding Acquisition of Shares of Fracta, Inc., a U.S. Startup (to Make It a Subsidiary)

At a meeting of the Board of Directors held on May 29, 2018, Kurita Water Industries Ltd. (“Kurita”) passed aresolution to invest in Fracta, Inc., a company incorporated in Delaware, the United States. As a result, Kurita hasexecuted an investment agreement with the company and its investors.
Fracta, Inc. provides a software service of predicting water main degradations by applying artificial intelligence(AI) and machine learning (ML) at Fracta (a company founded in 2015 in Redwood City, California, the UnitedStates), which is its wholly owned subsidiary.
Kurita announces today that the amount of this investment in Fracta, Inc. is approximately 37 million US dollars
and it will hold a majority of the outstanding shares of Fracta, Inc. through subscription for newly-issued shares
under the investment agreement, as well as private sale transactions between existing shareholders. As a result of
these transactions, Fracta, Inc. will be Kurita’s consolidated subsidiary. Details of the share acquisition are asdescribed below. In addition, from 2020 (up to 2024), Kurita will make Fracta, Inc. a wholly-owned subsidiary of
Kurita or its affiliates (the “Kurita Group”).
1. Reason for acquisition of the shares
In the United States, water main degradations are generally identified in a simple manner based on the age ofservice of the pipes, by checking the equipment visually on site, or by applying the similar method. However,these methods are not accurate enough to ensure appropriate management and replacement of water mains, which
has been a problem. In the United States, there are 240,000 accidents per year of breaks and leaks caused by aging
of water utility mains. This has been recognized as a social issue, and it is predicted that $1 trillion will be needed
to replace water mains by 2050. In the field of software services of predicting water main degradations, thepotential market size is estimated to be approx. $2 billion per year.
The software service developed by Fracta combines accumulated data of past water mains failures with various
factors for deterioration. An algorithm is applied to analyze correlations of more than 1,000 data items, enabling
quick, highly accurate output of the probability of failure and the optimal times to replace water mains. This
service thus permits significant reduction in the amount of maintenance cost and capital investment associatedwith replacement. Kurita’s investment in Fracta, Inc. will permit Fracta to enhance its sales system for businessexpansion and development system for strengthening functions of the software. It thus accelerates its market
deployment all over the United States, aiming to achieve growth of the business into one with sales of more than
$30 million, in five years.

On the other hand, Kurita positions IoT/AI as an important part of the infrastructure for providing water treatment
solutions to customers and pursues innovations in its business models and processes accordingly. Through its
investment in Fracta, Inc., Kurita will achieve Fracta’s leading-edge technologies and expertise in AI and ML andapply them to its water treatment technologies and services, thereby creating and expanding a new digital businessthat applies IoT/AI, in the field of water and the environment.
In addition, Fracta’s service of predicting water main degradations not only provides customers with economic
value, such as reductions in the capital investment and maintenance cost, but also contributes to the security andwealth of people’s lives by solving water resource problems. Working together with this company, Kurita willachieve a further evolution in the software service based on AI/ ML and aim to operate a business that will lead tosolutions of water resource problems faced by countries all over the world in the future.

2. Overview of the subsidiary (Fracta, Inc.)(1)
NameFracta, Inc.
(2)
Incorporation law, etc.
Laws of the state of Delaware, the United States
Location of the principal(3)1870 Broadway, 2nd Floor Redwood City, California, U.S.A.
place of business
Name and title of(4)Takashi Kato, CEOrepresentative
7,402 thousand US dollars (Approx. 830 million yen) (As of December(5)
Capital stock31, 2017)(6)
Date of foundationApril 20, 2017
Major equity holders andFracta Holdings LLC: 44.5%
equity holding ratios(7)
AI/Robotics Venture Strategy 3 Ltd.: 26.0%(including issuable
Stock option: 29.5%
shares)CapitalNone
relationship
Human
None
relationship
Relationships with(8)Business
KuritaNonerelationship
Fracta, Inc. is not a related party of Kurita. No directors,Relatedemployees, or affiliates of Fracta, Inc. are related parties
partiesof Kurita.
Sales of Fracta, Inc. is small because it has launched its businessBusiness performance(9)
recently. Its total assets are almost equal in amount to the above capitaland financial status
stock.
3. Percentage of equity interests to acquire and equity holding ratio before and after share acquisition
Equity holding ratio(1)-before acquisition
Percentage of equity(2)
50.1% (on a fully diluted basis)interests to acquire(3)
Acquisition cost
Approximately 37 million US dollars (Approx. 4,000 million yen)(4)Equity holding ratio
after acquisition

4. Schedule(1)
Board approval(2)
Date of signing(3)
Date of share transfer

50.1% (on a fully diluted basis)

May 29, 2018 (Japan time)May 29, 2018 (Japan time)May 31, 2018 (U.S. time) (plan)

5. Financial impact
The financial impact of the acquisition on Kurita’s consolidated financial statements is still under review and will
be disclosed in a timely manner where necessary.