x Abu Dhabi, UAESaturday 22 July 2017

Investment trickle turns into a flood

Banks are seeking ways to make it easier for companies and municipalities to raise funding for water-related projects, as investor appetite grows.

Banks are rethinking the way the water sector attracts capital to court growing numbers of environmentally conscious investors.

HSBC has identified about US$197 billion (Dh723.63bn) of bonds outstanding worldwide that have some link to water provision, many of them issued by municipalities in the United States.

But the bank predicts many of these bonds may in future be explicitly classified as water investments to take advantage of inflows from investors in environmentally focused funds.

"Water has been an investment theme for at least a decade and it's really increasingly important for a whole series of different companies," says Nick Robins, the head of HSBC's climate centre.

Private-sector investments in water infrastructure are growing, says Hans Peter Portner, a senior investment manager at Pictet Asset Management who oversees the bank's water fund.

Pictet, which points to increased demand for water-related themes from institutional and retail buyers, forecasts significant opportunities in waste water treatment.

Investments in drinking water are "too politically charged" to be profitable, Mr Portner says.

"But 87 per cent of the world's public services are handled by municipalities, with the remaining 13 per cent in private hands," he says.

"The driver that'll change that share is the lack of public finance to upgrade their infrastructure."