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6 February 2007 - General Electric has announced its first investment in the European water market, signalling its belief that water could soon rival the energy sector as a destination for infrastructure investment.
GE Energy Financial Services, which aims to invest $1bn in water infrastructure projects by 2009, is buying 95 per cent of Idex Aquaservices, a French operator that extracts and treats water for industrial use, for an undisclosed sum.
"There's a huge amount of liquidity in the market for infrastructure," said Kevin McCarthy, the managing director heading the water investment unit GE established last year. He said capital-intensive water projects, with lower risk and stable returns, were an attractive option that required relatively little research, adding, "Water scarcity is becoming a big issue globally."
GE estimates the global need for water infrastructure investments at $50bn, and says the market for industrial water treatment - Idex purifies water for food, drinks and cosmetics makers - represents about a third of global water assets.
GE's European entry follows a month of intense speculation over the possibility of consolidation among France's big water operators.
PAI Partners, the private equity group, has appointed banking advisers with a view to selling the water distributor Saur, which it acquired for €1.04bn ($1.35bn) from the conglomerate Bouygues two years ago, a financial source confirmed yesterday.
PAI hopes to sell Saur, France's third-largest distributor after Veolia and Suez, for more than €1.8bn, Reuters said last week, citing an unnamed source. Media reports have named the private equity groups Eurazeo and CVC, which lost out to PAI in the original sale, among potential buyers.
The cash-generative water and waste business of Suez, the utility group, remains
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