May 11, 2012 -- The London Environmental Investment Forum (LEIF) has released a report that indicates increasing venture capital investment activity in companies that are providing innovative water solutions to the oil and gas and mining industries.
The report, 'Water Innovation in Extractive Industries', identifies 25 private early- and growth-stage companies operating in the sector. According to publicly available data, 18 have successfully raised funds over the past five years, with several completing multiple rounds, and three are currently seeking funding.*
Other key findings in the report include:
• Increase in investment activity in the sector over the past five years -- 18 companies have raised more than $400 million in equity and debt
• Majority of activity taking place in North America
• A handful of venture capital funds have focused on this area and taken early positions: Energy Ventures, XPV Capital, Meidelinger Partners, Enertech Capital
• Several corporate venture funds and corporate development units of large corporations have taken strategic positions: Teck Resources, Cenovus Energy, BASF Venture Capital, Total Energy Ventures.
• Water companies currently serving the municipal and other industry sectors are now applying or looking to apply their technology and services to the resources markets
LEIF Chairman, Tom Whitehouse, said: "Some investors are cottoning on to a very significant change in extractive industries: water innovation is not a luxury item to decorate your CSR report, but a means of gaining competitive advantage."
Whitehouse cautioned that it's too early to talk of an investment boom, but said there is enough evidence to suggest that attention will continue and grow.
He indicated that most of the innovation and investment is taking place in the US and Canada, but pointed out that UK and Europe-based companies are also active and the markets are global.
"We expect the number of water technology and services companies seeking finance to continue to rise, at least in the short to medium term," he said. "But consolidation is inevitable. The large water service providers are building up their technology portfolios in an effort to become 'one stop shops'. So a trade sale to a strategic buyer is the most likely exit for investors."
Whitehouse said many venture capital investors have previously been wary of water, at least of municipal water. "The inherent conservatism of the municipal water industry and the capital intensity of most water projects has dragged many companies down and proved a big investor turn off," he explained. "This is changing as investors switch on to the water needs of the oil, gas and mining sectors, where water problems stand in the way of profits and water regulators are more of a spur to innovation than an inhibitor."
To download a copy of the report, visit: http://www.london-eif.com/images/stories/Reports/water innovation report.pdf
About Carbon International and LEIF
Carbon International is a fund-raising and investor communications consultancy which has been working exclusively with environmental and cleantech companies and investors since 2004. It is authorised and regulated by the UK's Financial Services Authority.
Carbon International launched the London Environmental Investment Forum (LEIF) in 2009. LEIF aims to identify high growth and emerging environmental investment themes and explores the opportunities within them through conferences, roundtable dinners and reports.
Industry leaders, innovators and institutional investors are convened at LEIF events and contribute to its reports.
LEIF provides a profile-raising and quality networking platform for its speakers and clients -- institutional and corporate investors seeking a quality pipeline of investment ideas, and growth companies seeking investment and partners.
LEIF conferences and dinners are free to attend, but attendance is strictly invitation only. Advisors, other than our sponsors, are excluded from LEIF conferences.
*Information obtained from company announcements