Global Water Intelligence Magazine

Jan 17 cover for web

Vol 18, Issue 1 (January 2017)

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In Global Water Intelligence this month


Need to know


Getting out
  • There is still plenty of excitement surrounding the sale of GE Water. Private equity players Blackstone, Clayton Dubilier & Rice, and Bain Capital are reported to have got through to the next round, although a large number of others failed to make the cut, as the price moved towards...
  • The other big sale – that of IDE Technologies – has gone suspiciously quiet. It was reported at the beginning of August last year that China Communications Construction Company had made a nonbinding offer for the business, but nothing has been heard since. Apparently...
  • Osmoflo founder Marc Fabig has finally relinquished his majority interest in the company to Hitachi Zosen, which leaves the desalination specialist with two Japanese owners (Marubeni holds the remaining 30%). It offers Hitz a route into...
Getting in
  • Hitz is not the only Asian company looking to broaden its international exposure in the water market. Low-pressure membrane manufacturer Memstar is opening a US office as part of an aggressive strategy to target international revenues of $100 million within the next five years, while industrial water chemicals and systems supplier...
  • Capital flows into early- and growth-stage water technologies appear to have tailed off last year, despite a healthy number of deals being struck. It may not be as bad as it looks – sector veterans claim that...
  • For those patient enough to slog it out, spectacular exits continue to be available: the visionaries who backed membrane manufacturer Beijing Scinor were rewarded with a handsome payout after the company was acquired for $131.5 million last year, while venture capitalbacked AquaVenture Holdings floated on the stock exchange at a valuation of...
Chile winter woes
  • Private water operators in Chile were caught unawares in late December after a group of MPs managed to pass a bill which threatens to do away with the minimum guaranteed regulatory return that they have enjoyed since the early days of privatisation...
  • The news is particularly troubling for Colombian multiutility EPM, which paid over the odds to acquire Chilean water concessionaire Aguas de Antofagasta in 2015. As if the threat of a financial haircut wasn’t bad enough, the Antofagasta deal is under scrutiny by...
In the stockpot
  • GWI’s annual survey of specialist water funds shows that record inflows last year resulted in almost $9.4 billion of assets under management being recorded as of 31 December. A further $2.5 billion has been committed to exchange-traded water funds, and the message seems to be that water as an investment theme is slowly but surely gaining traction, particularly among retail investors...
  • Amid accusations that there are too many European water funds competing for investors’ money, and that there is very little to split the approaches of the passive water ETFs, several investors have gone out on a limb to try to create differentiated investment strategies. The Calvert Global Water Fund broadened its remit last year by taking exposure to...
Refinancings
  • An impending change in leadership at the Puerto Rico Aqueduct and Sewer Authority (PRASA) following the departure of president Alberto Lázaro Castro in late December threatens to further delay the restructuring of $3.3 billion of the authority’s debt...
  • Thames Water, by contrast, has enjoyed virtually unlimited access to the bond markets over the past month, raising £900 million of debt across three different maturities...
Prepping for PPPs
  • The end of 2016 marked the start of what could be one of the biggest PPP bonanzas ever to hit the water industry, as Saudi Arabia announced a privately funded overhaul of its entire water chain in a bid to take the strain off overstretched national budgets (see GWI December 2016). The move is already making its mark felt in project developer circles, most notably with the public launch of Almar Water Solutions earlier this month The investment vehicle is led by former Abengoa Water head honcho...
  • Another Middle Eastern project developer that has quietly forged its own path is UAE-based Utico. Eschewing the hurly-burly of the competitive tendering market, the company has made a success out of a unique private finance model which involves it dealing directly with end-users. A $147 million investment into the company by...
Use and reuse
  • Abu Dhabi is hoping to achieve its goal of 100% wastewater reuse within the next three years, according to...
  • It remains to be seen whether the recent winter storms that restored California’s Sierra snowpack to more than 150% of its mid-January average will also dilute local water agencies’ appetite for securing...

Project Tracker

Project Tracker

Charting the progress of over 900 Desal, Reuse and PPP water projects in the international water industry.

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Latest Tracker Updates

Project Tracker Database
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PROJECT COUNTRY UPDATED STATUS TYPE
Waterbury O&... United States 22 Jun 18 Rather than pu... WTP
Eastham O&M, MA United States 22 Jun 18 A single propo... Utility
Sussex Borou... United States 22 Jun 18 No bids were r... Utility
Puno WWTPs Peru 22 Jun 18 Veolia and Aqu... WWTP
Antioch BWRO... United States 22 Jun 18 At its meeting... Desal

What's making the news in global water projects this month

Project tracker

Sierra snowfall fails to deter reuse projects; Nigeria revisits drinking water PPPs; Belgrade revitalises wastewater PPP plan; Tunisia shifts focus to rural communities; India’s hybrid annuity model gains traction; Ecuador and Paraguay seek private capital; all the latest project news from...

Intelligence


GWI Water Index

Record inflows underscore specialist water funds’ appeal

The sustained outperformance of many specialist water funds is convincing more and more clients to sign up. Differentiating between strategies will be increasingly important.


Water on the markets this month:

GWI IndexValueChangeDate
Global Water154.54-3.56%10 Jun
Asian Water104.62-6.53%10 Jun
EMEA Water90.98-3.01%10 Jun
Americas Water245.89-2.12%10 Jun

Market Profile

US investor-owned water utilities enjoy a bumper 2016 on the stock exchange

The valuations of many listed US water utilities rose to unprecedented highs in the first half of 2016. How can they sustain the momentum in a rising interest rate environment?

Municipal spending drives strong US water equipment stock performance

A noted uptick in municipal spending and an easing of industrial headwinds paints a positive picture for US equipment stocks going into 2017. Uncertainty surrounding promised federal infrastructure funding may have a lag effect in the short term, however.

Sanepar leads the charge as Brazilian water stocks rebound to new highs

The Paraná-based concessionaire finally made it to the big time in 2016, as international investors began to appreciate its potential, helping the shares to rise by a spectacular 220%. With valuations still compelling, how much upside potential remains in the market?

European water stocks fail to deliver in 2016 as sluggish economic growth takes its toll

Veolia and Suez were the biggest disappointments in terms of share price performance last year, as top-line growth proved elusive. With both stocks now bedded down at more attractive valuations, they could yet be the stars of 2017.

Chinese correction reverses 2015 gains for Asian water stock index

Choppy Chinese stock markets undermined the performance of GWI’s Asia stock index last year, as compliance worries were compounded by a devaluation of the yuan. A few stars managed to buck the trend.

Smarter strategies take hold as investment flows into water tech drift lower

Seasoned investors have shrugged off an apparent fall in the volume of venture and growth capital going into water technologies. The argument that a frugal capitalisation strategy is better for long-term value creation in the sector appears to be gaining traction.

The List

The top 30 prices paid for water assets in 2016

A revival of big-ticket M&A activity in water last year is sign of things to come. Several even bigger deals are awaiting closure in 2017.


 

Christopher gasson Seven thoughts on 2017

2016 was a terrible year for pundits. Nevertheless, Christopher Gasson thinks it is still worth a look in the crystal ball.


Chart of the month

Historical M&A flow in water

Although the headline data might suggest otherwise, 2016 was a big year for mergers and acquisitions in water.


Chart of the month jan 2017

 

Water Leaders

Introducing the Leading Utilities of the World

Last month the Global Water Leaders’ Group launched a new initiative to highlight the achievements of the top performing utilities in the world. It has ambitions to change the way the water industry works.

Being the best in the world is not our job

Singapore PUB’s chief executive Peter Ng has another goal in mind: being the best for Singapore. It means pursuing impossible performance targets, pushing the boundaries of technology, and still worrying about how to win the trust of customers.

 

 

 

Chief Technology Officer

User Perspectives

ABP grabs the bull by its horns with resource recovery drive

Irish beef manufacturer ABP Food Group is turning its own waste into an asset by delving more into the circular economy. GWI discovers how it derives value from its nutrient-rich wastewater and what’s next for the food giant. Read more

Smart Water Watch

Keeping heads above water with satellite image analysis

Satellite image analysis companies such as Utilis and Satelytics are offering utilities a new perspective on their networks. Can this small step offer utilities new insights or is it a giant leap too far? Read more

CTO Outlook

Taking the P in the circular economy

Wabag’s experience as an EPC contractor as well as a solid track record of in-house technology development has put it at the vanguard of innovation. CTO Kim Soerensen shares how Wabag is responding to the key trends of water recycling and more advanced treatment. Read more

See the latest technology updates on the Chief Technology Officer Homepage...

Americas

US investor-owned water utilities enjoy a bumper 2016 on the stock exchange

The valuations of many listed US water utilities rose to unprecedented highs in the first half of 2016. How can they sustain the momentum in a rising interest rate environment?

Municipal spending drives strong US water equipment stock performance

A noted uptick in municipal spending and an easing of industrial headwinds paints a positive picture for US equipment stocks going into 2017. Uncertainty surrounding promised federal infrastructure funding may have a lag effect in the short term, however.

Sanepar leads the charge as Brazilian water stocks rebound to new highs

The Paraná-based concessionaire finally made it to the big time in 2016, as international investors began to appreciate its potential, helping the shares to rise by a spectacular 220%. With valuations still compelling, how much upside potential remains in the market?

Chilean private water market spooked by new legislation

A recent parliamentary vote threatens to jeopardise regulatory certainty for international investors in the Chilean water market. The fall-out could be catastrophic for the sector.

EPM’s internationalisation strategy goes under the spotlight

The 2015 takeover of Chilean water concessionaire Aguas de Antofagasta has been blasted by a watchdog following accusations that Colombia’s EPM overpaid for the asset, while leaving local customers without proper access to drinking water.

Puerto Rico’s water debt restructuring faces a new setback

The Puerto Rico Aqueduct and Sewer Authority desperately needs to restructure $3.3 billion of debt in order to make capital improvements and pay outstanding bills. Could the private sector assist the troubled utility in achieving long-term financial stability?

Midland effluent deal advances Pioneer’s oilfield water infrastructure ambitions

Having secured its second long-term agreement to source municipal wastewater for reuse in its oilfield operations, Pioneer Natural Resources’ build-out of permanent water conveyance infrastructure in the Permian Basin is suddenly looking like a very smart move.

Memstar establishes US foothold for growth

The low-pressure membrane manufacturer intends to open a US office as part of an aggressive strategy to increase its global footprint outside of China. The move could involve an expansion of its existing UF product portfolio to include high-pressure membranes.

Debra coy Listen to yourself churn

Underlying trends will trump apparent setbacks for water investment, argues a sanguine Debra Coy.

Americas water in brief

California’s Department of Water Resources has increased its 2017 estimate of State Water Project deliveries to 60%, after winter storms boosted the Sierra snowpack to more than 150% of its mid-January average.


Asia pacific

Chinese correction reverses 2015 gains for Asian water stock index

Choppy Chinese stock markets undermined the performance of GWI’s Asia stock index last year, as compliance worries were compounded by a devaluation of the yuan. A few stars managed to buck the trend.

Hitachi Zosen moves into RO market with Osmoflo buy

Following its acquisition of a 70% equity stake, Hitz intends to use Osmoflo to tender for large-scale reverse osmosis facilities in the Middle East. How will they fit together?

Kurita accelerates overseas expansion with two new US investments

Kurita has developed a taste for mergers and acquisitions after whetting its appetite in Europe in 2015. Two deals in January offer different routes into the American market, and it looks like Kurita won’t stop there. Investors are keeping a keen eye on the bottom line.

New memsys owners outline industrial water strategy

Last quarter, a group of former Heilongjiang Interchina executives picked up the German membrane distiller for a fraction of its earlier valuation. What future does it offer them?

China water in brief

Shenzhen-listed Safbon Water Service completed its acquisition of 68% of troubled ceramic membrane maker ItN Nanovation at the end of 2016.

Willy yeo 2017: resolutions or dissolutions?

What does 2017 have in store for the Asian water market? GWI’s Willy Yeo takes stock and looks ahead.

Asia water in brief

Ratings agencies S&P Global and Fitch have both placed Aquasure’s senior secured debt issue rating on negative watch to account for the risk that the company – which owns the Victorian Desalination Plant – will fail to deliver its first water order from the state (due on 30 June 2017).

Asia water in brief

Ratings agencies S&P Global and Fitch have both placed Aquasure’s senior secured debt issue rating on negative watch to account for the risk that the company – which owns the Victorian Desalination Plant – will fail to deliver its first water order from the state (due on 30 June 2017).

Europe

European water stocks fail to deliver in 2016 as sluggish economic growth takes its toll

Veolia and Suez were the biggest disappointments in terms of share price performance last year, as top-line growth proved elusive. With both stocks now bedded down at more attractive valuations, they could yet be the stars of 2017.

Thames Water locks in long-dated funding as equity stake saga takes a new turn

After rolling over a high-coupon bond in December, the company took advantage of a dearth of primary bond supply to top up its coffers ahead of its fiscal year end. Its largest equity-holder is still having problems offloading its 26% stake.

Tackling Belgrade’s sewage treatment problem head on

The Serbian capital dumps all its sewage untreated into local rivers. Ten years after failing to get a PPP off the ground, the city is taking a collaborative approach to the problem.

David lloyd owen Some dry humour for 2017

Why is it that having a mobile phone matters more than having clean water? David Lloyd Owen examines a fine mess of a situation.

Europe water in brief

Greek and Israeli micro-irrigation companies Rivulis Irrigation and Eurodrip have agreed to merge in a deal which will see Israeli private equity fund FIMI Opportunity Funds retain a majority stake in the surviving entity.


Middle East and Africa

Saudi trading giant backs new water investment group

Multi-service conglomerate Abdul Latif Jameel has made a major play for the growing water and wastewater PPP market by setting up a new investment wing backed by some of the industry’s best-known names.

Abu Dhabi TSE pipelines set emirate on course for 100% reuse

The emirate boasts an enviable record on wastewater treatment, but distribution issues have meant large amounts of treated effluent are still disposed of into the sea. A trio of new pipelines is set to address that.

Utico gears up for PPP growth after securing major sovereign backing

The Emirates-based project developer has received a major boost to its finances following an investment from a fund backed by Islamic sovereigns. It is now looking to take its unique private finance model for infrastructure development around the world.

Tom scotney A tale of two developers

The resurgent PPP market in the Middle East will help those developers that help themselves, says Tom Scotney.

Middle East water in brief

Shimon Ben Hamo is set to resign from his post as head of national Israeli water body Mekorot, after serving in the position for five and a half years.