Incofin announces in the lead-up to the UN 2023 Water conference, the launch of the Water Access Acceleration Fund (W2AF). W2AF is a private equity fund focusing on safe drinking water, with EUR 36 million of commitments. The blended fund aims to provide 20 billion liters of water to 30 million people, mainly in Africa and Asia. W2AF invests in innovative water businesses that provide affordable, safe drinking water to underserved populations.
The committed capital comes from a diverse pool of private and public investors, including Danone along with BNP Paribas, the U.S. International Development Finance Corporation (DFC), Norfund, the Danish development finance institution IFU, and international foundation Aqua for All. The U.S. Agency for International Development (USAID) provided catalytic funding to enable a first-loss tranche.
W2AF is the first private equity initiative in a sector that is traditionally financed by governments, donors and foundations. The fund aims to demonstrate the financial viability of the safe drinking water market worldwide. It has a blended finance structure – an approach to use part of the public and private donor funds to attract capital from private investors. W2AF hit EUR 36 million in commitments at this first closing and aims to achieve total capital commitments of EUR 70 million in subsequent closings.
W2AF goes the last miles
Today, more than two billion people do not have access to safe drinking water. Inadequate or unreliable access to safe water is a harsh reality for many, especially in large parts of Africa and Asia. Piped water is in most countries a common way to get water to consumers, but where piped networks are unavailable or unreliable, people rely on wells or community water supply systems. Mostly women and girls have to walk, sometimes for miles, to reach the nearest water source. A growing world population, together with rising consumption and climate change threatens to increase water access inequality even more.
More and more, local entrepreneurs are coming up with promising market-based, yet affordable solutions. W2AF plans to invest in various decentralized solutions, such as water kiosks, which deliver safely treated drinking water in gallons to the home or to the local store. In addition, the fund will invest in water pipe infrastructure and water technologies. The investments will contribute to delivering safe drinking water to low-income communities around the world.
State Street Bank International GmbH in Paris will provide depository services.
“Drinkable water is a luxury we too often take for granted. Yet, 2.2 billion people today do not have access to safely managed drinking water. Meanwhile, there are talented water company owners who know how to solve this problem but can’t find an investor who aligns with their vision to help them scale up. That’s why Incofin created the W2AF, to address the growth capital needs of these entrepreneurs, and to prove that the drinking water sector is investment-ready, even when targeting low-income people.” Dina Pons, Managing Partner Incofin and W2AF Fund Relationship Manager.
“In a context where 1 in 3 people in the world do not have access to safe drinking water, we consider that it is crucial to join forces with public and private actors and scale up financial and social impact. Water is a key pillar of our mission to bring health through food and drink. Building on the experience of our impact fund Danone communities, we are today going a step further in supporting innovative social businesses dedicated to water access issue, and we hope other actors will soon join us.” Henri Bruxelles, Chief Sustainability and Strategic Business Development Officer of Danone
“Blended finance is critical to achieve universal access to water. Safe drinking water enterprises complement public efforts serving low-income communities in emerging markets. These enterprises struggle to access capital to scale and become sustainable. By making impactful water investments, W2AF will pave the way for other private and public investors”, said Josien Sluijs, Managing Director of Aqua for All.
“Norfund is delighted to play a part in setting up this first-of-its-kind fund and contribute to developing new ways of mobilizing the needed capital to provide access to safe and affordable drinking water. Norfund has ambitions to invest further in this sector that is essential for people’s health, but also for job creation, and we see this fund as an important step in building a larger portfolio”, says Delphine Gilbert, Investment Manager at Norfund.
“We are very happy to join W2AF that aims at improving affordable and safe water access for underserved low-income population in South Asia and Africa with a Just Transition approach, a very innovative initiative in the impact investing space. Indeed, W2AF’s theory of change focuses on the safe water value chain which addresses both social and environmental issues with substantial positive impacts: avoiding preventable diseases, fostering gender equality, plastic bottles reduction, CO2 emissions avoidance, …. ”, Laurence Pessez, Head of Group CSR at BNP Paribas.
“W2AF investments in innovative water businesses will advance water security by providing affordable, safe drinking water to millions of people in Africa and Asia. The fund will work to address the fundamental problem of access to clean water, which is increasingly scarce due to climate impacts such as excessive heat and drought. We are proud to be a part of this investment that meets DFC’s mandate of financing solutions to the most critical challenges facing the developing world today”, said Jake Levine, Chief Climate Officer at DFC.
“Lack of access to clean drinking water has profound consequences for billions of people in emerging economies, and we are far away from meeting the SDG 6 target on creating access to safe water for all. W2AF is an innovative tool to mobilise the needed private capital, which can speed up investments in private sector water companies and demonstrate that the water sector is financially viable. We are looking forward to being part of this initiative and make a positive impact by providing clean and affordable water to 30 million people”, said Arent Christian Kjær, Investment Director at IFU.
“At State Street we believe that addressing ESG issues can help generate better long-term outcomes. As an asset servicer, asset manager and responsible corporation, we aim to create value for our stakeholders. We are very pleased to accompany Incofin with the launch of this pioneer fund and to provide depository services”, Christophe Baurand, Country Head at State Street Bank International GmbH in France.