ESG investors help Resonance raise $300m for water fund

AP1, one of the LPs backing the fund, said 'water scarcity and water treatment issues are cornerstones of AP1’s resource efficiency-focused sustainability strategy'.

Real assets manager Resonance has secured six institutional investors to reach a $300 million third close for its pioneering industrial-focused water infrastructure fund.

The Resonance Industrial Water Infrastructure fund, which the manager calls “the first institutional fund exclusively focused on financing industrial water infrastructure projects”, will aim to build a portfolio of 10 to 15 water assets, ranging in size from $10 million to $50 million. It will target assets across Europe, South-East Asia, China, Australia and New Zealand. Its first investment will be in a coal-to-chemical waste water reuse plant in China.

A signatory to the UN Principles for Responsible Investment, Resonance, affiliated with alternatives manager Fidante Partners, is pitching the fund’s ESG credentials, which has helped it attract the likes of Swedish pension AP1 and the UK’s BAE Systems Pension Funds Investment Management. Fidante managing director Phil Peters argued that “pension funds, endowments, and funds with an ESG policy are looking for strong investment ideas, and this appeals because of the water industry’s investment characteristics and growth potential”.

Mikael Angberg, AP1’s chief investment officer, said “water scarcity and water treatment issues are cornerstones of AP1’s resource efficiency-focused sustainability strategy”, while BAE alternatives investment manager Vikram Aggarwal pointed out that “this investment represents a compelling way of marrying attractive risk-adjusted returns with delivering socially useful outcomes”.

The vehicle will provide equity to finance the design and build of what it calls specialised industrial water treatment plants co-located with industrial users. Resonance sees the global industrial water treatment industry as a $53 billion opportunity, growing at 8.6 percent yearly until 2020.

Resonance’s water team is led by managing director Lydia Whyatt, who has over 10 years of water experience and was responsible for launching the fund. Water industry veterans Herman Cai, in Hong Kong, and Michael Froud, in Singapore, are also part of the team. The real assets manager said it will also work closely with water-focused consultancy Amane Advisors, which will provide it with access to more than 120 water and waste industry professionals in the UK, France, China, Bahrain, the US and Singapore.

In addition to water, Resonance also invests in renewable energy and currently has $450 million of assets under management.