As the world celebrates the United Nations’ 33rd World Water Day, Dublin-based KBI Global Investors (KBIGI) has clocked up 25 years managing water assets and revealed its outlook on investing in water for the next quarter century.
To mark this important milestone in the firm’s commitment to sustainability, KBIGI has unveiled a special celebratory logo (see below), which will feature prominently across marketing communications and collateral.
Whilst there were some small water stocks in the market at the time of launching the dedicated KBI Water Strategy in 2000 – focused on investing in publicly traded companies involved in the global water industry – the modern water investing theme was born at the height of the TMT bubble.
The Strategy has witnessed a major transformation of the water industry and water stocks over the period; it has matured, continues to evolve, and is said senior portfolio manager, Matt Sheldon (pictured), “an industry sitting pretty.”
“The water companies and markets have grown in confidence and maturity, ready to tackle the years ahead”, said Sheldon. “We believe few industries can demonstrate the same level of robust positioning. Applying the framework of Porter’s Five Forces², the water industry today has significant barriers to entry, minimal substitution or technological obsolescence risk, boasts numerous customers and suppliers, and rational competition in almost all niches.
“The key drivers of our investment strategy – first articulated 25 years ago, and pushed forward by population growth, industrialisation (the trends in AI and reshoring included), urbanisation, infrastructure rehabilitation, and increasing regulation – are even stronger today in our view. This is furthered by what climate scientists are warning might be an exceptional period of warming, rising seas, and ultimately an accelerated water cycle, leading to more severe weather, flooding, and droughts.
"While China in the 2010s, and India more recently, have been exciting growth markets for water, we would expect the next 25 years to benefit from recent signs of growth from the UK and Brazil, and ultimately, strong growth from developing regions such as Africa and South-East Asia.”
Commenting on the milestone, and its achievements in natural resources investing, over a quarter of a century, deputy CEO, Geoff Blake said:
“Investors typically gravitate towards thematic investing because they believe the long-term drivers of the markets and/or their competitive structural nature, will facilitate outperformance over time.
"Our long-term track record in managing water assets has been demonstrated over the last 25 years, as is the case for thematic water investing, and we are excited to see how the next 25 years play out in this evolving market, rich with companies delivering some of the most innovative solutions to the global problems around water scarcity.”
