Feb 08, 2007

GE Enters Private Water Finance Business

GE Energy Financial Services aims to build a $1 billion portfolio of water investments over the next three years. Last month the company completed its first investment by putting $18 million into a four-year-old wastewater reuse plant near Atlanta.

The move follows a reorganization of GE a year ago, which brought GE Energy Financial Services (EFS) into Dave Calhoun’s GE Infrastructure alongside GE Water and Process Technologies and GE Energy. This step could eventually lead to GE becoming a major developer in the Middle East IWPP (independent water and power project) market, as well as driving new investment in the European private water sector.

The water investment unit is led by Kevin McCarthy, who has been given two objectives. “One is to support GE Water in its development of structured projects and the second is that we will grow our own separate structured portfolio of assets where there is no relationship with GE Water.” He concedes that this second objective will lead to situations where EFS is financing GE Water’s competitors, which will only be a problem if GE Water is also competing for a project. In those circumstances EFS will be expected to support the in-house bid.

In the Middle East EFS has been targeting the IWPP market. This has been developed over the past six months in association with GE Energy and GE Water.

Currently the water group has a staff of 12 at its Connecticut headquarters. A London based water investment presence to cover Europe and a Middle East is office is expected to open shortly.