Consolidation an Overwhelming Catalyst Within the Water Utilities Sector: Expert Analyst Timothy Winters Interviews with The Wall Street Transcript, Says He Anticipates Even More Consolidation in the Group

Wall Street Transcript

67 WALL STREET, New York - August 26, 2013 - The Wall Street Transcript has just published its Water Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Water Infrastructure Development - Irrigation and Metering Technology - Water Industry Consolidation - Regulatory Headwinds for U.S. Utilities

Companies include: American States Water Company (AWR), Aqua America Inc. (WTR), American Water Works Company, (AWK), California Water Service Group (CWT) and many more.

In the following excerpt from the Water Services Report, an expert analyst discusses the outlook for the sector for investors:

TWST: For investors, it seems like there are several advantages to the group. Are you generally positive on the entire group?

Mr. Winter: Yes. In addition to the positive issues I already mentioned, there is one other overwhelming catalyst: takeovers. The industry has consolidated quite a bit over the years, and we anticipate even more consolidation. Transactions have occurred at 2.5- to three-times book value, 25- to 30-times earnings.

The U.S. has a lot of opportunity because of the fragmented nature and the municipally dominated nature of our water and wastewater infrastructure, and they see the ability to come in and try to provide economies of scale into this fragmented industry. They buy U.S. water utilities and try to gain a foothold or beachhead so that they can reach out and try to consolidate and then privatize. So that is another potential.

You see a lot of private equity has bought into the industry. Macquarie is one. You have SouthWest Water, which was bought by J.P. Morgan and Water Asset Management. A lot of the U.K. water utilities were bought by private equities. As a matter of fact, of the 10 water utilities in the U.K., seven of them were purchased, and they are now in private hands.

There are only three publicly traded U.K. water utilities left, and that would be Severn Trent (SVT.L), the United Utilities (UU.L) and Pennon (PNN.L). Severn Trent was approached with a takeover bid back in May and June, which they turned down.

But the interests by the private equity is not only that regulated earnings and dividend streams are very safe and attractive relative to what you can get in the bond markets, but also by gaining this expertise that the water utilities have in treating and dealing with water infrastructure, they can try to accomplish goals throughout the world where you have supply issues and...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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