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Brown Gibbons Lang & Company: Wastewater Seeing Growth, Capital Inflows

October 17 2017

Cleveland, OH – October 17, 2017 – Population growth and industrial expansion are escalating concerns over water scarcity and demand for clean water, pressuring the need for more rigorous enforcement of environmental regulations, according to an industry report released by Brown Gibbons Lang & Company (BGL). Wastewater discharge requirements are becoming more stringent to protect water quality, positioning the non-hazardous liquid waste management industry for growth.
BGL and contributor The Boston Consulting Group examined trends driving growth in the U.S. wastewater market, sized at more than 100 billion gallons in daily treated volume. The industry spans industrial, commercial, and residential generators of liquid waste and includes diverse materials such as grease, septic waste, and green streams. The report, compiled through discussions with industry executives and data analysis, documents a favorable industry outlook:
  • A growing regulatory focus on water and waste recovery, both at the state and federal level, with bipartisan support, is expected to sustain demand for services. “Whether it is the introduction of additional regulations, the enforcement of existing regulations, or the move towards beneficial reuse to a greater extent, all that bodes well for the industry,” remarked John O’Connell, chief executive officer at Wind River Environmental and a participant in the report.
  • Broader themes of diversion and waste-to-energy are encouraging beneficial reuse with application across diverse liquid waste streams, from recycled yellow grease and organic residuals to recoverable oil products from wastewater. Technology investment is accelerating as operators diversify into new waste streams and seek to maximize resource recovery. “Beneficial reuse will continue to be a disposal option,” said Andy McNeill, chief executive officer at Denali Water Solutions. “Companies with composting or anaerobic digestion capabilities will be well positioned.”
  • Billions will be needed to revitalize the nation’s aging wastewater infrastructure, with investment in the construction, repair, and maintenance of treatment systems required to meet projected demand. “There is a lot of money that has to be spent in this sector,” offered Bill Fahey, a senior vice president at Veolia North America and a report participant, citing regulation and system failures as catalysts for major past investment in water and wastewater. Looking ahead, private equity is expected to play a signif¬icant role in project funding with capital raised targeting infrastruc¬ture and wastewater. “If the public-private partnership model were to be embraced by local politicians and water authorities, I think there is a real oppor¬tunity for private investment.”
Private investment is growing, illustrated by recent leveraged buyout and growth capital activity, with financial sponsors actively pursuing acquisition strategies to build scale, service offering expansion, and geographic footprint in a highly fragmented market. Valicor (Wind Point Partners), Wind River Environmental (Gryphon Investors), and Liquid Environmental Solutions (ABS Capital Partners) are among the private equity-backed platforms that are aggressively consolidating the industry.
About Brown Gibbons Lang & Company 
Brown Gibbons Lang & Company is a leading independent investment bank serving the middle market. BGL specializes in mergers and acquisitions advisory services, debt and equity placements, financial restructuring advice, and valuations and fairness opinions, with global industry teams in Business Services, Consumer, Environmental & Industrial Services, Healthcare & Life Sciences, Industrials, and Real Estate. BGL has offices in Chicago, Cleveland, and Philadelphia and real estate offices in Chicago, Cleveland, San Antonio, and San Diego, in addition to Global M&A partner offices in more than 50 countries across 5 continents.  BGL is able to deliver to our clients unparalleled access to strategic relationships, investors, and opportunities globally. For more information, please visit www.bglco.com.

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