Aqua America Seeks Municipal Water Systems to Expand Footprint

Aqua America Inc., the second-largest publicly traded water company in the U.S., is seeking new assets to expand its footprint as American cities with debt issues weigh partnerships with utilities.

With municipalities open to partnerships or outright divestiture of their water systems, Aqua America’s “next step will probably be M&A, and probably with cities,” Chairman and Chief Executive Officer Nicholas DeBenedictis said in an interview in London. “We’re looking to grow our capital base.”

Aqua America last month announced an agreement to acquire North Maine Utilities’ water and wastewater system that serves 44,000 people in the village of Glenview, Illinois. Bryn Mawr, Pennsylvania-based Aqua America has purchased 25 municipal water systems in 22 years. The company serves almost 3 million people in Texas, Illinois, Indiana, Ohio, Pennsylvania, New Jersey, Virginia and North Carolina.

Aqua America is “well-positioned to internally fund needed investments for our customers and to acquire both municipal and private water and wastewater utilities,” it said in documents as its CEO met U.K., Swiss and European money managers this week.

Investors such as Pictet Asset Management SA and Impax Asset Management Group Plc hold shares. About 20 percent of Aqua America’s investors are outside the U.S., data compiled by Bloomberg shows.

Market Value

The water and wastewater provider made 15 acquisitions last year to increase its customer base in eight states by 1.3 percent. It expects at least 15 deals in 2014, including six already completed, that will add as many as 2 percent more customers.

Aqua America began as single state utility. In a side business, its Aqua-PVR Water Services venture supplies natural gas producers in the Marcellus Shale region of north-central Pennsylvania with freshwater for drilling sites.

Aqua America’s market value has risen to $4.5 billion from $157 million in 1992. The shares have gained 5.4 percent over the past year compared with an almost 27 percent advance in the same period by the 19-member Bloomberg World Water Index.

Net income advanced almost 13 percent last year to $221.3 million from a year earlier.