Investors commit €36m to back businesses providing affordable, safe drinking water to underserved populations mainly in Africa and Asia.
Incofin Investment Management has launched the Water Access Acceleration Fund (W2AF), a private equity fund and blended finance initiative, which aims to demonstrate that investing in the safe drinking water market in low-income regions is a viable proposition.
The fund already has €36m of committed capital from a number of public and private investors and is targeting total capital commitments of €70m. W2AF is the first private equity initiative in a sector traditionally financed by governments, donors and foundations, according to Incofin.
Backers so far include food conglomerate Danone, BNP Paribas, the US International Development Finance Corporation, Norfund, Danish development finance institution IFU, and Dutch-based foundation Aqua for All. The US Agency for International Development (USAID) provided catalytic funding to enable a first-loss tranche.
The fund was launched in the run-up to the first UN Water Conference held this week, convened to promote solutions to the shortage of clean water around the world – a shortage that is likely to get worse due to impact of climate change and population growth, unless urgent remedies can be found.
Over two billion people around the world do not have access to safe drinking water, meaning that UN sustainable development goal 6 to ensure access to water and sanitation for all is a long way from being met.
The fund’s goal is to provide 20bn litres of water to 30m people, mainly in Africa and Asia, through investments in a growing pool of innovative water businesses providing affordable, safe drinking water to underserved populations.
W2AF plans to invest in various decentralized solutions, such as water kiosks that provide safely treated drinking water to homes or local stores, as well as water pipe infrastructure and water technologies.
Dina Pons, managing partner at Belgium-based Incofin and the fund’s relationship manager, said W2AF had been created to support entrepreneurs struggling to find capital and prove that the drinking water sector is a viable investment, even when serving people on low-incomes.
“Drinkable water is a luxury we too often take for granted. Yet, 2.2 billion people today do not have access to safely managed drinking water. Meanwhile, there are talented water company owners who know how to solve this problem but can’t find an investor who aligns with their vision to help them scale up,” she said.
Non-profit Aqua for All, has provided de-risking investment and also technical assistance for the fund. As Impact Investor reported last year, the assistance will help ensure that companies receiving investment from the fund are capable of absorbing and using capital of a size they may not have dealt with before.
Josien Sluijs, Managing Director of Aqua for All, said blended finance was critical if universal access to water was to be achieved.
“Safe drinking water enterprises complement public efforts serving low-income communities in emerging markets. These enterprises struggle to access capital to scale and become sustainable. By making impactful water investments, W2AF will pave the way for other private and public investors”, she said.