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27 April 2017 / Reese Tisdale
Water Sector M&A = $57 Billion Across 447 Transactions


Suez’s $3.4 billion acquisition of GE Water, the largest pure-play water deal to date, began to make me think more broadly about M&A activity across the global water sector. After all, the GE sale attracted a reported 72 interested parties. It started with, who else is getting into water and what trends can we infer from the data?

The results are in– Bluefield Research’s analysis of water M&A activity from 2014 into Q1 2017 showed $20 billion of transactions in 2016, pushing the three-year announced total to more than $57 billion. This does not even include the approximately 215 deals with undisclosed transaction prices.

In any case, the types of deals and breadth of companies building out positions by acquisition are positive signals for water sector growth. Broader market forces, including poor water quality in Flint, growing population demands, and increasing risks to industrial company bottom-lines, whether they be in energy, power, brewing, or mining, underpin this deal flow among companies angling to be at the forefront of this change.

Since 2014, 63% of the 447 deals tracked by Bluefield have been focused on technology, equipment & service companies (e.g. membranes, pipes, pumps, meters, EPC services). The remaining 37% feature utility network & distribution assets, including 113 investor-owned utility acquisitions in the U.S. and transfers of equity stakes in water treatment systems (e.g. desalination plants).

Number of Deals by Segment and Disclosed Valuation Totals

Source: Bluefield Research

There are a number of takeaways from all of this collected data, including EBITDA multiples, target companies, regional trends…etc, but I wanted to share a couple key trends that signal far-reaching impacts on water sector going forward:

  • U.S. remains epicenter of deal flow. Of the 447 deals analyzed, 265 targeted companies are headquartered in the U.S. The $1 trillion infrastructure investment proclamations by the Trump administration, public concerns about water quality, and municipalities need to do more with less financially has bolstered investment sentiment towards technologies focused on efficiency and private participation.
  • Advanced technology solutions usher new wave of growth opportunities. Whether it be for reclaimed wastewater for municipal and industrial reuse in the U.S., micro-pollutant treatment in Europe, or mining sector demand for alternative water supplies in Chile, water treatment & management solutions are becoming more sophisticated and economically attractive. As a result, consolidation of advanced technology suppliers will gain momentum, globally, as strategic buyers look to expand their portfolios through acquisition.
  • Consolidating EPC sector impacting water. Over the past 36 months, leading engineering design firms in water, Stantec, AECOM, Arcadis, TetraTech, AMEC Foster Wheeler and Jacobs– have participated in more than US$11.7 billion of deal flow to recast their footprints and change the competitive landscape among leading service providers.
  • Japanese, emerging Chinese players navigating globe. A growing roster of critical infrastructure investors, such as Mitsubishi Corporation, Mitsui & Co., Beijing Water, and China Everbright, have secured beachheads in global hotspots, including Brazil, the U.K., Australia, and the Middle East. This activity could have longer-term impacts on competition for technology and utility ownership going forward.
  • Financial investors seek efficiencies. Since 2014, more than 41 deals have been executed by financial investors, including EQT Partners recent acquisition of Innovyze. These companies are playing critical roles in financing the growth and expansion of some of the leading companies in water and wastewater treatment.

One thing is for certain, there is no one path for investment in water.

What’s your bluefield strategy?

Reese Tisdale is the President of Bluefield Research, a market research and insight firm focused exclusively on supporting companies addressing opportunities in water.

Reese Tisdale
President

Reese Tisdale has an extensive background in industry research, strategic advisory, and environmental consulting in the power and energy industries. Prior to co-founding Bluefield, Mr. Tisdale was Research Director for IHS Emerging Energy Research, a leading research and advisory firm focused on renewable energy. He also has demonstrated experience in groundwater remediation for oil & gas companies and as an international market analyst for ThermoFisher Scientific.

Mr. Tisdale’s interest in critical infrastructure needs and developing markets is influenced by his three years in El Salvador, where he led water supply and agriculture projects immediately following the country’s civil war. He has a BS in Natural Resources from The University of the South, Sewanee and a Master in Business Administration from Thunderbird: The American Graduate School of International Management.





Industrial Water Management Surpasses $10B, Annually; Reflecting Moves Toward Greater Efficiency wateronline.com/doc/industria… #IndustrialWater #WaterEnergyNexus #WaterRisk #WaterManagement

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