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Virgin-backed water company raises $30m

AquaVenture Holdings, a Californian water service provider created by Virgin Green Fund and VC firm Element Partners, raised the capital from seven investors in a round led by Element.

AquaVenture Holdings (AVH), a Californian water service provider created by the Virgin Group’s Green Fund and venture capital firm Element Partners, has raised $30 million in equity from seven investors. This was about $5.8 million short of its target, according to US Securities and Exchange Commission filings.

Element Partners, the energy and environment-focused firm, led the round following its $50 million investment alongside mutual funds manager T. Rowe Price into the merger of AVH with Quench USA, another water technology company, in October 2014.

The global water market is estimated to be $600 billion and growing at 7 percent a year on average, according to Bank of America Merrill Lynch. Pressures on the sector include population growth, urbanisation and industrialisation, depletion of groundwater sources, pollution of waterways and inefficient management of water infrastructure, and these are expected to create a 40 percent global shortfall in available freshwater by the year 2030, according to the 2030 Water Resources Group.

“The growing scarcity of clean water and the capital to spend on water treatment systems will drive strong and growing demand for Water-as-a-Service,” reads AVH’s website.

Quench is the second platform company owned by AVH joining Seven Seas Water Corporation, a provider of water management solutions, specialising in the supply of potable, ultra-pure and reuse water.

“Through its Quench and Seven Seas Water businesses, AVH provides water solutions, utilising state-of-the-art purification and desalination technologies,” reads the company website. “The term ‘Water-as-a-Service’, or WAAS, refers to providing municipal, industrial and commercial customers with a reliable, worry-free, low-cost water supply without requiring up-front capital investment. In such arrangements, water systems are operated and maintained by water experts, yielding predictable and contracted water costs for customers.”

The Virgin Green Fund is a renewable energy and resource efficiency fund created by the global conglomerate in 2007. Advent-Morro Equity Partners, a private equity investment firm based in Puerto Rico, is another investor in the company.

Water has been a hot topic in the US where the state of California is experiencing its worst drought on record. Earlier this week, the Department of Agriculture made $235 million available to improve the nation’s water quality and Chicago-based Rural America Fund II has made its first investment in a water-saving technology firm, Aquatrols Corporation of America, a water-saving technology company that uses compounds to optimise soil-water-plant interactions.