Water and Environment

Ecofin's Water and Environment capabilities seek to invest in companies across the globe and throughout the water value chain that we believe are in a position to benefit from the pursuit of solving the water supply/demand imbalance.

Water has attracted an increasing amount of investment and consideration for a number of reasons, namely:

  • Water shortages
  • Water quality concerns
  • Deteriorating water infrastructure in developed countries and need for water infrastructure in emerging markets

We believe the following tactics will improve the supply/demand imbalance:

  • Maximizing water supply through water loss prevention technologies, water reuse and desalination
  • Improving water efficiency through adoption of advanced irrigation methods, growth in process control systems and advances in household water technology
  • Upgrading legacy water infrastructure in developed countries, as well as building out water infrastructure in emerging markets
Commentary Sustainable Infrastructure 5/31/2018

Water: a wave of opportunity

Capital investment is required to solve the water crisis

<1%

of the world's water is available for consumption.

Source: U.S. Department of the Interior U.S. Geological Survey (December 2016).

$14 Trillion

of capex is needed for water infrastructure and technology globally

McKinsey Global Institute: Infrastructure productivity (January 2013).

34%

of all water produced is lost during transmission and distribution

McKinsey Global Institute: Infrastructure productivity (January 2013).

Investment Process

Qualitative analysis

  • Company strategy and growth prospects
  • Business model and risk assessment
  • In-depth regulatory analysis
  • Management strength
  • ESG factors
  • Energy transition thematic

Quantitative analysis

  • Proprietary modelling of earnings and cash flows
  • Balance sheet strength and credit rating
  • Sensitivity analysis
  • Sustainability and carbon emissions assessment

Relative value analysis

  • Peer analysis
  • DCF, regulated asset base and multiple analysis
  • Total return approach: capital appreciation and dividend
    prospects