Private Equity, Public Inequity

Investment bankers and other major financial players are increasingly interested in taking control of water and sewer services across the United States. Private equity vehicles are armed with more than $100 billion for infrastructure worldwide. Although most deals in the U.S. water utility market have involved existing private sector companies, a number of fund managers anticipate that the ongoing fiscal crisis will drive some governments to privatize their water infrastructure. To make that prediction a reality, major financial interests are backing various government proposals that facilitate privatization and private financing of public infrastructure.

This is an alarming development. Private equity players typically focus on short-term profits and may seek to flip assets after driving down service quality and driving up prices. Households and businesses could end up paying more for inferior service.

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