Toronto water fund wants to deploy profitable solutions, expects interest from Chinese partners
Confronted with serious water scarcity and pollution, Chinese private sector demand for water technologies is increasing
XPV Water Partners, a private equity firm based in Toronto managing two water funds totalling US$400 million, believes institutional capital can be a sustainable solution towards tackling water pollution and scarcity, which affects a quarter of the world’s major cities.
Co-founder David Henderson said he anticipates that the number of Asian investors, particularly from China, will increase as the 12-year-old firm sees the potential for raising a third fund.
In China, some studies point to 12 provinces in the north suffering from water scarcity. Availability of less than 1,000 cubic metres per person per year is the internationally accepted measure of water scarcity. The country is also beset with water pollution challenges, after years of contamination from industrial and household waste.
Through its funds, XPV Water Partners’ team of 21 investment professionals are helping growth-stage water technology companies generate attractive returns to investors. These technologies are often demanded by governments and private sector globally, which are seeking improvements to environmental monitoring, treating waste and recycling water.
“If we can make investing in water companies profitable, that would attract more capital, with which we could then solve bigger water problems,” said Henderson. “Hence, we need to solve water issues and make profitable investment all at the same time. This is what makes for sustainable solutions, rather than solely relying on government grants and subsidies.”
The growing interest from potential Chinese partners is evident from his observation during a recent trip to Beijing and Shanghai earlier this month where he saw Chinese companies and state-owned entities increasingly deploying water technologies in environmental monitoring.
