The global private equity sector has grown thirteenfold since 2000, and one area where we have seen increasing investments is in infrastructure sectors, including water. According to Damian Georgino, a Partner at Womble Bond Dickinson, Member of their Corporate and Securities, Private Equity, and Energy & Natural Resources Sector teams, and Head of the Water Subsector, “Water is a scarce resource with a fixed supply and ever-increasing demand. It is used in every industry and is estimated to be a $1.0 trillion global sector, with its demand increasing at triple GDP rates. Ninety-seven percent of the world’s water is in the oceans, leaving only a small fraction available, making it a precious and overexploited resource.”
PE is an industry disruptor amidst growing challenges, including increased demand, aging infrastructure, and the call for more sustainable solutions. They are changing the water landscape by buying and privatizing municipal and regional water utilities. A new subscription model for water management, called Water-as-a-Service® (WaaS), has emerged, where businesses and municipalities pay for water services rather than owning the infrastructure. These services can include water treatment and purification, water supply and distribution services, wastewater treatment and reuse, smart water management and analytics, infrastructure development and financing, and compliance/ESG management.
“While municipal PE infrastructure investments have very long lead times, industrial outsourcing of water treatment (including process water and wastewater for use in making products throughout the manufacturing sector from steel to chip manufacturing to food and beverage to pharmaceuticals) is a much more straightforward financial decision,” according to Georgino. He adds, “These new ‘distributed water’ asset ownership models (variously, DBOOM, DBOOT, DBOO) coupled with operation and maintenance contracts provide a long-term stable solution for manufacturers and provide PE with certainty of revenues and counterparty creditworthiness. These new models also have significant ESG benefits for lower energy consumption, recycling, recirculating, reuse / lower water usage, and less strain on local municipal water and wastewater systems.”
Ultimately, PE expertise and investment can be leveraged to drive efficiency, attract private capital for infrastructure development, and accelerate the adoption of advanced water treatment and distribution technologies.
As PE’s influence on the sector continues to grow, new talent will be needed to meet the shifts in the industry. Opportunities expected to be in increasing demand include:
Investment Analysts Specializing in Water Infrastructure
PE firms need analysts to conduct due diligence on potential WaaS ventures to ensure they are sourcing opportunities to scale water businesses while generating income and capital appreciation for investors.
Portfolio Managers Focused on Environmental, Social, and Governance (ESG) Criteria
As WaaS aligns closely with sustainability goals, including UN Sustainability Goal #6, PE firms hire portfolio managers with strong ESG knowledge to ensure that WaaS investments yield financial returns while contributing positively to environmental and social outcomes.
Operational Advisors with Water Sector Experience
To enhance the performance of WaaS investments, PE firms engage operational advisors who bring industry-specific experience. These advisors assist portfolio companies in optimizing operations, implementing best practices, and driving innovation within the water sector.
Risk Management Specialists
Investing in WaaS involves navigating regulatory, environmental, and operational risks. PE firms recruit risk management specialists to manage strict Infrastructure Investment and Jobs Act (IIJA) funding and mitigate potential challenges associated with water infrastructure projects.
Sustainability and Impact Measurement Analysts
PE firms need analysts who can measure and report on their water investments’ environmental and social impacts to demonstrate compliance with ESG standards and attract socially conscious investors.
Customer Support & Sales
As distributed water and investment in municipal operations expands, sales professionals will be needed to market a WaaS provider’s competitive advantage to prospects, and account managers will service specific accounts to address concerns and ensure satisfaction.
In 2024, the water sector saw several large mergers and acquisitions, suggesting a growth trajectory for PE that will continue in 2025. This will result in diverse opportunities for professionals across virtually every functional area, including finance, operations, marketing, sales, engineering, and technology.
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