Today we announced the initiation of our partnership with KKR for water and wastewater system operations in the City of Bayonne, NJ, using United Water’s award winning new ‘Solution’ model to address water infrastructure needs.
This brings new private equity investment to address the water challenges that many municipalities face today.
Our CEO, Bertrand Camus, first announced this innovative model at 2012 Clinton Global Initiative Annual Meeting, where it was recognized as a featured innovation. United Water and KKR’s partnership with Bayonne was also recognized as Partnership Performance of the Year at the 2012 American Water Summit.
As a part of this joint venture, we will acquire a 40-year water and wastewater concession from the Bayonne Municipal Utilities Authority (BMUA). Under the contract, BMUA will continue to maintain control of rates charged to customers, the ownership of the water and wastewater system and oversee compliance adherence and customer service performances.
Our initial payment of $150 million to the BMUA will be used to eliminate the BMUA’s existing debt and improve its finances. The joint venture has further committed to funding another $157 million into the system over the life of the contract. KKR, which made the investment through its infrastructure fund, will fund 90% of the joint venture with United Water.
Our innovative ‘Solution’ comes at a critical time when numerous municipalities across the country are struggling with municipal debt. The investment in Bayonne’s infrastructure will lead to improved service reliability and water quality while maintaining rate stability. The funds will be used to upgrade water systems and to help ease pressure on municipal balance sheets, freeing the city to invest in other services.
As our CEO, Bertrand Camus, put it: “What is unique about this model is that it is a blend of United Water’s operations expertise and KKR’s long-term vision, which brings credibility to address America’s water challenges. Our commitment to funding improvements in the water and wastewater system is critical to keeping rates stable and under BMUA’s control. KKR has a long history of making infrastructure investments and a proven commitment to improving the operational and environmental performance of the companies in its portfolio, making it an ideal partner for this investment.”