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Demand for water will soar as conflicts in the Middle East intensify, data centres consume vast amounts of resources and the global population grows, the chief executive of Spanish utility group Cox warned, as he revealed plans for a €300mn initial public offering.
“We’re going to grow on water,” Nacho Moreno said, adding that he expected global water treatment needs to increase annually at a rate of 10 to 15 per cent.
“The water market is one that grows at a double digit compounded annual growth rate, so anywhere between 10 and 15 per cent, which means that in four or five years, it doubles its size.”
At the same time, he expects the gap between water availability and demand to widen by 40 per cent each year.
Cox did not disclose a valuation but plans to price its shares on the Madrid Stock Exchange at a discount to its main rivals, French utility group Veolia and Spanish construction group Acciona.
The company is also targeting a market capitalisation of more than €1bn, according to sources close to the discussions.
The IPO is a primary offering of stock, with a commitment to floating at least 25 per cent of Cox’s share capital as required by Spanish regulations.
Conflicts in the water-scarce Middle East are driving demand for solutions that shore up water supplies, Moreno said.
“In the Middle East, it’s all about water. They’ve got everything else they need. They’ve got the sun to provide clean energy. They’ve got the wind. They’ve got the money to invest. But they lack the water.”
If Saudi Arabia’s desalination plants were to blow up, for example, the country would run out of water after a few hours, he added. “Water security, given the geopolitical situation, is something which is key.”
To address this, Cox has developed floating desalination plants in the sea that can be moved to secure provisions and supplies.
Another big driver of demand for water is the rapid advance in technology, with the growth of data centres needed to power artificial intelligence and cloud computing. These rely on water-intensive cooling systems.
Data centres are expected to grow exponentially, especially in tech-heavy regions such as the southern US.
“The data centres demand a huge volume of water in order to cool down [servers],” said Moreno. “AI is massively driving the need for both water and energy.”
Elsewhere, more and more water is needed for human consumption and to irrigate agricultural land as temperatures rise and the number of people to feed around the world grows.
Moreno said that the funds raised from the IPO would be used to secure new long-term agreements for water services, such as desalination and treatment, and to develop renewable energy projects that will power those operations across North America, Spain, north Africa and the Middle East.
The Madrid-based group expects to tender for contracts for up to 20mn cubic metres of water a day in the next 12 to 24 months across these regions, according to Moreno.
