Another PE fund eyes India water industry

The growing scarcity of water in India and China is attracting several private investors. As the two leading economies battle growing water shortages and runaway pollution of water resources, soem of these PE funds are sensing a growing potential in services and technologies that present solutions to these problems.

The latest among the long list of private investors in the water industry is PE firm Olympus Capital that has closed a $250 million Asia fund that seeks to make investments in the waste management, water quality treatment infrastructure and clean energy sectors in the two countries.

Betweem them, India and China have enough people to present a huge market, perhaps bigger than any other market. So, Asia's third and second largest economies, in this order, remain on the investment radar of investors looking for opportunities in the sector that is already seeing a lot of action.

Olympus' fund, Asia Environmental Partners LP, has received commitments from several quarters including the private lending arm of World Bank, International Finance Corporation (IFC). The fund intends to focus on equipment and services companies engaged in water management and energy efficiency.

Olympus is reportedly exploring opportunities that call for investments ranging from $20 million USD to $100 million USD. Its immediate focus would be on energy efficiency and water management, besides municipal solid waste management.

Despite the growing interest of investors in the Indian water industry, it has remained largely devoid of any big ticket private equity deals. As a result, most of the companies in the sector, particularly the small and medium-sized ones, have depended on traditional routes of fund raising, including borrowings and going public.

However, now that several water-focused funds and private equity vehicles have announced investment plans, the water sector would see a lot of activity.

Hopefully, in the process, some long-term solutions and technologies would get available to the masses.