Opportunities for private capital in the U.S. water sector are expected to proliferate as municipalities struggle to address a forecasted ten-year $532 billion CAPEX charge. Already serving 16% of the U.S. market, private water players are poised for an expanded role to address a widening infrastructure gap. Below are four of the market shifts our water experts are seeing:
- Recent policy developments have improved the environment for private investment. While Pennsylvania, New Jersey, Illinois, and Indiana have been the hottest markets, more states are on the cusp of new legislation to encourage private participation.
- An uptick in M&A for large municipal water systems and smaller tuck-ins. With $528 million completed and pending water deals, on the books, 2016 is already on track to surpass last year by more than $231 million in terms of total deal value.
- Investor-owned utilities continue to refine their growth strategies: Utilities are pursuing strategies to diversify into market-based services including industrial water supply and O&M contracts.
- Scale of capital requirements spark PPP conversations: Still at an early stage in their usage in the U.S., public-private partnerships are another valuable tool for utilities to leverage going forward.
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