Environmental Market Opportunities
Water scarcity and lack of access to clean water pose significant challenges around the world. These challenges are exacerbated by climate change, urbanization, and population growth. In many markets, aging or inadequate water and wastewater infrastructure are potential risks to sustainable growth efforts. We believe there is a compelling opportunity to harness markets to address these challenges.
We serve clients in this area through our Public Sector and Infrastructure team within the Investment Banking Division, and also co-invest alongside clients through our investing teams.
We will seek to facilitate private capital for much needed water infrastructure investments, including through well-designed Public-Private-Partnerships (P3s). When appropriately structured, these partnerships bring the benefits of operational efficiency and economies of scale, facilitating rate stability and high-quality, long-term public water access. Examples of communities with which we have previously worked include:
Efficient Water Management Technologies
We will look for opportunities to finance and co-invest in technologies that improve the efficiency of delivering and consuming water, as well as technologies that enhance wastewater management and enable water reuse and recycling.
Supporting Green Infrastructure Solutions
We will look for opportunities to devise investment structures that can harness green infrastructure solutions as a complement to traditional infrastructure in meeting our water needs. For example, restoring forests, installing green roofs and increasing green space can help alleviate stormwater runoff while improving the health and resiliency of cities.
CASE STUDY: WASHINGTON, D.C.
In 2016, Goldman Sachs Urban Investment Group worked with the District of Columbia Water and Sewer Authority (“DC Water”) in structuring and investing in the first-of-its-kind Environmental Impact Bond (EIB) issued by DC Water. The EIB will fund green infrastructure (e.g., permeable pavement, rain gardens) that harnesses nature in order to alleviate stormwater runoff, helping to reduce pollution in the District’s waterways while also stimulating local job creation. The transaction utilized an innovative performance-linked structure, whereby the coupon payments will vary based on the level of success of the green infrastructure. Learn more.
In 2014, Goldman Sachs acted as lead bookrunner on DC Water’s $350 million green bond offering. The capital was raised to fund new infrastructure to address combined sewer overflow issues, helping to improve water quality, reduce flood, and restore the District of Columbia’s waterways. This was the first green bond with a 100-year maturity, which matched the life of the asset and spread financing costs across generations that will benefit from the project. It was also the first U.S. issuer to carry an independent opinion of the sustainability of the issuer and the project.
CASE STUDY: LEHIGH COUNTY, PENNSYLVANIA
In 2013, we worked with the Lehigh County Authority on a 50-year, $308 million concession of Allentown’s water and sewer system. This was the largest water and sewer transaction in the state since 2011. Goldman Sachs served as the sole underwriter for the bond issuance, and helped develop a debt structure that provided the organization with access to investors in a challenging market.