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Private Water Players Hunker Down Under

06 July 2015
Research Note

On 7 May 2015, Mitsubishi-owned Trility announced it finalized purchase of six Water Infrastructure Group (WI Group) contracts from Pentair covering 35 wastewater treatment plants. The contract sale is one of three transactions Pentair has completed in the past year as part of its broader sell off in the Australian water infrastructure market.

On 4 December 2014, Pentair sold the design, build and maintenance business of WI Group to engineering firm Monadelphous. It followed this deal with the January 2015 sale of its water transport division to Crescent Capital after an impairment loss of US$183 million. Pentair obtained these assets through its acquisition of Tyco International’s flow control business in 2012 and has sought to bring its Australian operations in line with its broader core competencies among weakening market conditions.

Challenges to the Abbott administration’s agenda to increase private participation in the water sector, combined with relatively flat growth in the mining segment, have reduced the country’s attractiveness for new water infrastructure projects in recent months. Although a steady stream of smaller contracts continues to flow.

Takeaways

  • Private sector’s progress in municipal sector checked by political resistance
  • M&A among few growth paths in Australian market
  • Smaller scale municipal services contracts, industrial plants provide incremental activity

Companies Mentioned

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