Resonance Asset Management hails successful industrial water fund

London-based Resonance Asset Management is in the process of raising a new fund to invest in industrial waste water plants, after the company's first water fund raised $220 million (£174m €204m), which has already been invested in 14 projects with a focus on Asia, China, Australia and Europe.

"We have taken a fairly unique and innovative approach by investing in industrial water infrastructure through a fund, which has not been done before," Nick Wood, Resonance's CEO/CIO told inspiratia.

"In the past specialised water treatment plants within the industry have been funded by a combination of bank debt or by the engineering company that builds them such as Veolia and Suez. A handful of funds or private investors have financed these plants in the past internationally, and we saw the opportunity to start  a new segment financing industrial water based out of the UK," he added.

Resonance intends to target North America in the future after moving to revamp its investment strategy, and in the future wants to encourage the collocation of renewables capacity next to new water treatment plants.

"We are now in a position, after a slow start, where we are seeing a huge demand from industry to make these kind of investments because they need to comply with environmental regulations," Wood added.

Most importantly the plants are contracted too, which is encouraging to the types of investors – mainly pension funds - that Resonance is aiming to recruit.

"You don't build the plant until you have negotiated all the arrangements for the supply and treatment of the water, the take off of power and the due diligence that goes along with that, ensuing that all the parties know that they are entering into a long-term contract," Wood added." All this happens before any money is spent on building something."

Past deals

Resonance was founded in 2007, to make real asset investments within the sustainability framework for institutional investors. Wind in the UK was the initial focus, which in 2010 was quite an unusual asset class, with few institutional investors and with the fund focusing on smaller leveraged assets.

The company's initial wind fund is now fully invested after three years, with just over £100 million (€117m $126m) spent. Another fund focusing on feed-in tariff (FIT) wind followed and raised £150 million (€175m $189m), which was spent to create one of the biggest FIT UK wind portfolios.