Italian asset manager plans flow of deals to reduce water waste

An Italian asset manager has launched plans to create a European champion for reducing water waste, as large swaths of the continent battle severe droughts.

Ambienta, which invests in private and listed companies with an environmental focus, is stepping up its exposure to groups whose products limit water waste. Although the war in Ukraine has put energy security front and centre for European companies and policymakers, the alternative asset manager has warned that water scarcity risks being overlooked.

“Seventy one per cent of the planet is made up of water but only a small fraction is accessible and renewable,” said Nino Tronchetti Provera, Ambienta’s founder and managing partner. “Already today 10 per cent of the global population lacks access to the water it needs and the figure risks rising to 40 per cent by 2040 if we don’t make the right choices.”

The group, which has €3bn of assets under management, has recently made a series of investments linked to water with the aim of creating a leading European group in the sector.

Last month it acquired Calpeda, a high-tech water pumps manufacturer based in northern Italy, which it is planning to integrate in its water investments holding company, christened Wateralia. Water pumps such as Calpeda’s reduce water dispersion in businesses and households, leading to energy and water savings.

Wateralia also includes Caprari, another Italian family-owned business specialising in water pumps in which Ambienta took a majority stake last year. It now plans to buy more such businesses and increase its exposure to the sector.

Almost half of continental Europe and the UK are currently exposed to severe drought risks, with unusual heatwaves being exacerbated by little rainfall during the winter, according to a study by the European Commission.

Italy is one of the most affected countries with the northern region experiencing its worst drought in decades.

“This is not surprising in a world where economic growth has outpaced the ability of the planet to digest pollution and produce enough resources for everyone,” said Tronchetti Provera. “We need practical solutions to traditional business models. If there are water pumps that allow industries that consume large amounts of water to save some, that’s a good investment.”

According to the UN, half of the global population could be living in regions facing water scarcity by as early as 2025.

Water has emerged as a niche investment theme in recent years, spurred by wider interest in sustainable investing. Global investment companies such as Amundi and Fidelity have launched exchange traded funds on water-related themes.

Ambienta invests through its own hedge fund and by taking stakes in public and private companies, sometimes buying the latter outright.

The asset manager has made over €1bn in revenues across 148 countries since it began investing in 2007. In 2021 earnings before interest, taxes, depreciation and amortisation grew 18 per cent compared with the previous year.

The firm has invested in 54 companies across Europe including in Italy, Germany and France. These countries had many successfully family-run companies that needed outside investment to grow further, said Tronchetti Provera.

One former investee company, German water-based paint manufacturer Oskar Nolte, expanded globally after being bought by Ambienta and is now Sweden’s Ikea’s paint supplier. Water-based paints are significantly less pollutant than the traditional solvent-based ones.

“Companies won’t solve the world’s environmental issues by planting trees or installing solar panels on their roofs,” said Tronchetti Provera. “If you don’t update your traditional industrial processes, the market will eventually sweep you away.”