India's leading engineering company McNally Bharat Engineering has planned to make a foray into the fast growing water industry in India. The company is eyeing water and wastewater projects in the country.

McNally Bharat Engineering has entered into an exclusive technical partnership agreement with Singapore's leading water technology company Hyflux for this purpose.

The technical partnership will allow McNally Bharat, that undertakes turnkey projects in infrastructure and related manufacturing activities primarily in India, to set up sea water desalination, water and wastewater plants in India. Hyflux has a strong presence in the water desalination industry with projects across the world.

The Indian company is eyeing projects in the industrial, municipal and agricultural sector in India.

"With this tie-up MBE shall be setting strong foot-print in this area in India where there is a strong demand in Sea water desalination project particularly in municipal, agricultural and other industrial usage", a company statement said.

Several Indian companies, engaged in providing engineering services, have turned towards the water industry and remain bullish on the business potential in view of the Indian government's increased spending on infrastructure. The increased focus on water infrastructure and irrigation systems has attracted several companies to make a foray into the sector.

Companies like McNally Bharat expect the renewed focus on water infrastructure sector to culminate in more orders in the irrigation systems, water supply and sewage water treatment space.

The Indian government had raised the allocation for irrigation projects by almost 100per cent to $57 billion USD for the Eleventh Five Year Plan ending 2012.

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.

India-centric fund eyes investments in water sector

Yet another fund has decided to tap the growing water industry in India. India-centric Prithvi Sustainability Innovation and Technology Fund, with a proposed corpus of $150 million, has decided to make investments in the Indian cleantech industry, including the growing water industry.

The fund is looking to make investments in companies in India that provide solutions to water, air and soil contamination. And, it will be looking at emerging areas such as biofuels, air pollution management, soil conservation and organic farming, renewable energy sectors like solar power and wind, solid waste management, biomass combustion, co-generation systems and recycling technology.

Phew! That's just about as much cleantech you can have on your plate.

Prithvi hopes to achieve first close of the fund by January 2010 at $100 million and a final close in March. (I hope to be around to share its next step here).

The fund is currently tapping overseas investors including institutions, high net worth individuals and hedge funds in the US and UK. It also remains in talks with investee companies and will make investments after the first close.

Prithvi hopes to invest in companies engaged in various sectors of the water industry and is particularly eyeing projects in the water contamination, rainwater harvesting and wastewater treatment industry.

The proposed investment by Prithvi in the water sector in India is an indication of the growing interest of venture capitalists in the technology solutions being provided by some Indian companies in the sector. With the growing scarcity expected to create additional demand for water in the country, several private equity funds have already evinced interest in picking up stakes in companies engaged in the water sector.

The $150-million fund will have an investment range of $5 million to $15 million (Rs 23-Rs 70 crore) each in order to help ventures across a range of clean and green technology segments.