Morgan Stanley Infrastructure Partners (MSIP) has finalized the sale of its stake in Seven Seas Water Group to the EQT Infrastructure VI fund after a five-year ownership period. This transaction underscores a strategic shift in the water services market, driven by escalating global demand for reliable water access amid significant infrastructure strains.
The deal reflects a savvy investment strategy from MSIP, which initially acquired Seven Seas Water Group in 2020, focusing on its Water-as-a-Service® (WaaS) model. Under MSIP’s stewardship, Seven Seas expanded its potable water capacity from 11 billion gallons to 27 billion gallons annually, while also increasing its contracted wastewater treatment facilities from 131 to 202. The company’s revenues doubled during this period, demonstrating the effectiveness of MSIP's focus on critical infrastructure investments.
The financial specifics of the sale to EQT Infrastructure VI have not been disclosed, yet it comes at a time when the water services sector is under increasing pressure. According to the World Health Organization, by 2024, approximately 2.1 billion people will lack access to safely managed drinking water, a statistic that is driving both public and private investment into sustainable water solutions.
Strategically, this deal aligns with MSIP's broader investment strategy, which emphasizes the importance of essential services in response to demographic changes and climate impacts. Alberto Donzelli, Managing Director and Co-Head of Europe at MSIP, noted that the growing global need for water services is a critical element of their investment focus, as population growth and economic development continue to escalate water demand.
Looking ahead, the transaction is expected to enhance the operational capabilities of Seven Seas under EQT’s management, particularly as the company aims to provide independent and reliable water and wastewater treatment services to underserved regions. Seven Seas currently manages 220 plants across North America, including the U.S., Caribbean, and Latin America, and is poised to continue expanding its footprint in response to localized water shortages.
The timeline for the completion of this transaction is immediate, with the transfer of ownership and operational oversight already in effect. As for regulatory considerations, both MSIP and EQT have previously navigated necessary approvals given the critical nature of water services and the involvement of public agencies.
The broader market impact of this deal signifies a growing recognition of the investment opportunities within the water sector, particularly in light of projections indicating that by 2040, demand for water could surpass supply by 40%. Furthermore, governmental bodies worldwide are increasingly acknowledging the urgent need for investment in water infrastructure, representing a significant opportunity for private market players like Seven Seas.
In conclusion, the transition of Seven Seas Water Group to EQT Infrastructure VI fund not only reflects a strategic realignment for MSIP but also highlights a vital movement towards addressing global water challenges through private investment. This shift has the potential to impact shareholders positively, while also improving access to essential water services in communities that need them most.