The $2.4bn bid for Northumberland Water by a fund owned by Hong Kong industrialist Li Ka-Shing last month was seen as just the latest takeover of a British utility by international investors. In reality, it is the latest in a series of early moves that may yet reshape the global water sector. Yet in the coming era of water shortages and water conflicts, there is urgent need for greater global integration in an industry that, for historical and political reasons, remains overly national both in scope and ambition.
A global population expanding by 220,000 people a day requires new sources of water. To be fair, corporate activity in this area is increasing. In Israel, Whitewater, a leading water technology business, is completing a new funding round to support international expansion. In Singapore, KKR is reported to have paid $114m for a stake in a wastewater treatment company to gain access to the Chinese market. Despite this, however, few water companies operate outside a confined geographical area.
Just as the energy and electricity sectors have become international, so now we need to see the emergence of truly global water multinationals. The reluctance of water companies to venture into international markets is rooted in history, and a handful of bad experiences. Water industry investors have seen the sector as a utility play – dull, but safe from cyclical pressures and volatility.