(BFM Bourse) – Fresh water is a vital resource for human beings. But with repeated droughts, the population explosion and changing consumption patterns, the blue gold that was thought to be inexhaustible is becoming scarce. If the situation is worrying to say the least, this resource also represents an investment theme for many management companies.
“I love water, in 20 or 30 years there will be more. I hope not”, if this quote from Belgian actor Jean-Claude Van Damme gave rise to a smile 13 years ago, With hindsight, this cult phrase has become prophetic over the years…
Water is an essential resource for life but unfortunately it is not infinitely expandable. Especially since population growth and climate change are exerting ever-increasing pressure on existing water resources.
Growing drinking water needs
There are thus 2.1 billion people, or 30% of the world’s population, who still do not have access to domestic drinking water supply services and 4.5 billion, or 60%, who do not have safely managed sanitation services, according to a joint report by WHO and UNICEF, published in March 2021. And the problems are not confined to Africa and developing countries, far from it have to. Concerns also affect European countries, including France, which is currently facing a worrying episode of drought.
“Since last summer, the water tables have not recharged. […] We remain with 68% of the tablecloths which are below normal for the season” with 19% where they are “very low”, declared Tuesday the Minister for Ecological Transition, Christophe Béchu, on the airwaves of France Inter.
At the beginning of the week, there were more than 65 departments which had introduced restrictions on the use of water (alert levels, heightened alert or crisis). Fifteen of them have even moved to crisis level, which restricts the use of water to priority needs.
The IME (Institution of Mechanical Engineers) asserts that water needs – to meet human food demand – could reach between 10 and 13.5 billion cubic meters per year in 2050, i.e. approximately three times the the amount currently used.
If the situation is worrying to say the least, it also represents an investment theme for many management companies, like Pictet which launched in February 2000 (!) – an eternity on the scale of the Stock Exchange – its fund dedicated to blue gold. This vehicle is invested in shares of listed companies operating in the sectors of the global water industry (supply and technologies affiliated with water and environmental services). And the least we can say is that Pictet had a hollow nose. Its thematic fund has posted hearty gains of 268% since inception.
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The issue of “water stress”
Other management companies have also taken the plunge, such as Mandarine Gestion, which has looked into the issue of water stress, which describes a critical situation in which the available water resources are below asked.
The management company recalls in this respect that “40% of drinking water should disappear within 30 years on a global scale, due to global warming and pollution”. In this context, Mandarine Gestion warns of the imminence of a water crisis, which involves major challenges for many industries, including energy production and agriculture.
The agricultural sector is particularly affected by this scarcity of water resources. “At the end of June, the American Midwest was confronted with a real drought, which increased the price of wheat and corn by nearly 15%. This drought has consequences on harvests and therefore on our ability to ensure the food for populations”, explains Adrien Dumas, investment director of Mandarine Gestion, on the branch of BFM Bourse.
This theme of water can be played from several angles assures Adrien Dumas, namely that of water treatment or infrastructure since “20% of drinking water in France disappears for lack of infrastructure to standards. To the States States, the infrastructures are much more aging and the extent of this loss [d’eau] must be even more important,” he adds.
To play this theme, the management company particularly appreciates Valmont Industries, an American specialist in agricultural irrigation. The expert praises “the fairly relevant technologies” offered by the company to farmers and which allows them to measure water stress in plots and optimize irrigation. Adrien Dumas also quotes Tetra Tech, a consultant who “helps municipalities, counties, US federal states to think about issues related to water and more generally to environmental issues”. This company therefore has “a great avenue of growth”, estimates the manager.
Water management is a theme also promoted by Jo Hambro, a British management company whose Regnan Sustainable Water and Waste fund celebrated its first year of existence last April.
The theme of water and is “perpetual” recalls Bertrand Lecourt, manager of the Water and Waste fund on the branch of BFM Bourse. For the expert, this theme is driven by five strong trends such as the increase in consumption linked to the densification of populations in cities, or the need to constantly invest in infrastructure resulting from this urbanization, to name a few. than they.
The expert quotes our national champion Veolia, which is “present throughout the value chain” of water and waste management. The company also announced last June an investment in the desalination of seawater in Abu Dhabi to supply drinking water to 210,000 homes. This reverse osmosis seawater desalination plant, which is scheduled to be commissioned in 2025, will be the third largest in the United Arab Emirates.
Osmosun the newcomer to the stock market with significant know-how
In this context of water scarcity and risk of water shortage, the desalination of seawater has indeed become a preferred and abundant solution since nearly 70% of the planet is covered with salt water. But this process, which has been proven for several decades, is highly energy-intensive and emits a large quantity of greenhouse gases.
Water desalination requires “a lot of energy to draw water”, notes Bertrand Lecourt. And that’s where Osmosun, a company based in Gellainville, not far from Chartres, comes in. The company, founded in 2014, has deployed a technology that meets the crying needs for drinking water while limiting the carbon footprint linked to its production. The company intends to “make drinking water accessible to all” with its innovative process that desalinates seawater and stale water using solar energy.
The device developed by Osmosun does not require batteries, which are generally used to store electricity when the sun fails in overcast weather or when night falls. This is a real technological feat for Osmosun, which is the only company in the world to master this patented innovation allowing the units to manage the random variation of the energy available.
And given the theme of Osmosun, namely access to drinking water for all, the company’s IPO, launched at the end of last June, met with “strong” success with investors. And this enthusiasm was also evident from Osmosun’s first steps on the stock market. Listed since Monday on Euronext Growth, the title of the company based not far from Chartres closed on a last listed price of 12.098 euros, Friday evening. This is almost twice as much as its introductory price set at 6.50 euros…
Sabrina Sadgui – ©2023 BFM Bourse