Private-equity investments could address water challenges

Mid-market private equity firm Agile Capital asserts that investors have a great opportunity to make sizable investments in the water sector and contribute towards the advancement of sustainable water solutions.

It invests across several industries in South Africa and uses its networks across the mining, financial services, engineering and environmental industries to identify and originate transactions.

Its investment approach entails researching and identifying companies that provide services and products required in the economy and for businesses in various sectors. Agile has, for example, identified services pertaining to water quality – such as water testing, water treatment and water storage solutions – as good investment opportunities.

The firm stresses the importance of investing in scalable businesses that supply equipment and water testing services to the private sector as well as to public water-management authorities, while identifying that private-equity investments can consolidate and improve the effectiveness of businesses in this sector.

In acknowledging the negative impacts that mining, manufacturing and energy generation can have on the environment, Agile highlights the need for water to be tested regularly to ensure that any contamination is treated and water is sustainably managed.

“Agriculture is dependent on clean running water, and contamination can have far-reaching effects on crop quality and yield, livestock, food security and other sectors that rely on agriculture for growth,” says Agile Capital partner Liz Kolobe.

Agile is invested in water testing and environmental management company Aquatico as well as energy and water engineering consulting company BBenergy. Aquatico tests water for mines in line with mine and water-use licence stipulations, and has laboratories in Gauteng, the Western Cape and the Northern Cape. BBenergy, through its subdivision BBwater, assists clients in implementing more responsible water practices and water management systems. The company stresses the importance of using treated wastewater as a cost-effective and reliable source of water and reducing the demand on surface and groundwater sources.

Kolobe says public–private partnerships in the water sector will help expedite the process of improving water quality in the country, as mining and agricultural companies that rely heavily on water are now presented with an opportunity to secure their supply and quality, as well as regulate their use and treatment of water.

“For the private sector to invest, and to ensure good business principles are implemented, is a win-win situation, as this increases its ability to aid the effective development of infrastructure that works.”

Kolobe notes that, although government is responsible for the basic infrastructure of water services, it does not have the capacity to solve all the water infrastructure problems from either a financial or skills perspective.

The firm remains hopeful that there will be more investment in the sector, highlighting that providing secure and good-quality water impacts on the ability of a company to operate sustainably and grow its operations.

As a sector-agnostic private investment business, Agile will continue to deploy its capital to grow reputable and sustainable companies that consolidate their presence and reputation in the country. The strategic support and liquidity that Agile Capital offers allows for slow and steady growth and often means that the investee businesses expand further into sub-Saharan Africa.