"Water industry digitalization holds immense promise for financial gains"
In a world where water is becoming an increasingly scarce resource, the demand for water is soaring. This demand is driven by businesses, consumers, and population growth, creating a need for relevant infrastructure and technologies. Amidst this growing demand, the KBI Water Fund has emerged as a leading investor in companies offering solutions to major water problems.
The KBI Water Fund, established in 2008, focuses on small to medium-sized companies that provide sustainable solutions for water supply. These solutions range from wastewater treatment and filtration to addressing emerging contaminants like PFAS in water. The Fund's portfolio consists of up to 70% pure water companies, reflecting its commitment to this critical sector.
One of the most promising areas for investment is emerging markets, where water scarcity is particularly severe. Regions like Sub-Saharan Africa, including countries such as Kenya and Malawi, are in dire need of investments in water supply and sanitation solutions. The KBI Water Fund considers companies from these markets, recognising the significant investment opportunities they present in clean water infrastructure, water technology, and the digital transformation of water utilities.
Digitally transforming water utilities is crucial for improving efficiency and sustainability. By reducing massive water losses (up to one-third of treated water), optimising billing and collections, and improving energy use, these transformations enhance utility creditworthiness and attract further financing. This creates a virtuous cycle of improvement.
Investors, including impact and ESG-focused funds, are increasingly channeling capital into emerging markets to address these challenges while achieving social impact and financial returns. However, ESG scoring for companies in emerging markets can be challenging due to limited information availability. To overcome this, the KBI Water Fund actively engages with companies to improve corporate governance, encourage transparency, and promote best practices.
The KBI Water Fund also invests in companies that offer filtration and treatment solutions for PFAS in water, a class of emerging contaminants that pose significant health and environmental risks. Every dollar invested in water quality and availability is estimated to return at least seven dollars in societal and economic gains through better health, food security, energy, and environmental outcomes.
With more and more investors showing interest in the water sector due to the sustainability trend, the KBI Water Fund's focus on emerging markets presents a compelling investment opportunity. The Fund's concentrated portfolio of 40 to 50 stocks, combined with its active engagement with companies, makes it a key player in shaping the future of water management in these markets.
In summary, the KBI Water Fund's focus on emerging markets offers a promising avenue for investment. By addressing critical water scarcity, offering high social and economic returns, improving utility performance through digital transformation, and benefiting from evolving supportive policies and innovative financing approaches, the Fund is well-positioned to make a significant impact in the water sector.
- The KBI Water Fund, recognising the significant investment opportunities in clean water infrastructure, water technology, and the digital transformation of water utilities, considers companies from emerging markets like Sub-Saharan Africa, including Kenya and Malawi.
- In the realm of finance and investing, the KBI Water Fund invests in companies that offer filtration and treatment solutions for PFAS in water, with every dollar invested estimated to return at least seven dollars in societal and economic gains.
- To maintain its commitment to the critical water sector, the KBI Water Fund actively engages with companies to improve corporate governance, encourage transparency, and promote best practices, particularly in emerging markets where ESG scoring can be challenging.
