Sunday, July 21, 2019

Carlyle Back in Public Water via JV


The Carlyle Group announced a joint venture with VICO Infrastructure  to invest in public water projects.  The announcement comes after Carlyle's contentious ownership of Mountain Water in Missoula, Montana.  Carlyle pulled $2 million in overhead/annual management fees from Mountain Water before reneging on its promise to sell the water utility to the City of Missoula.  Carlyle sucked $15 million from Mountain Water, $10 million in management fees/overhead and $5 million in dividends. 

Carlyle's co-head of its Global Infrastructure Opporunity Fund said of the VICO JV.  WaterWorld reported:

“Population growth and increased economic activity in areas with limited water supply are increasing constraints on water infrastructure. We see a significant opportunity for VICO and Carlyle to invest in these communities to deliver improved, sustainable and resilient infrastructure for all stakeholders.”
Carlyle and VICO will invest in revenue producing projects that will hit citizens directly in their pocketbooks.  Carlyle co-founder David Rubenstein expects 20% annual ROE on infrastructure projects.  It launched a $2.5 billion Global Insfrasture fund in 2016.

WaPo said Carlyle had grown tired of water projects and would focus on energy instead.   That was 2014.  Apparently a few hot summers increased Carlyle's thirst for return.  Thus, public water is back on the PEU table.

Carlyle's partner is headed by the former President of PERC Water Corporation.  PERC completed water projects mostly in California and Arizona.  In Montecito, California wealthy citizens desired more water and mobilized candidates to achieve their objective.   The Water Board refused to hear a proposal from PERC in 2014.  Four years later a Trump like campaign sought to replace the board en masse.

PEU ownership, which is now widespread in healthcare, will not make water more affordable.  Surprise medical bills could soon be followed by surprise water bills.  How high can household debt go for the non-rich?