Shares of AquaVenture Holdings (WAAS) has advanced nearly 16% since the firm’s initial public offering on Oct. 5, but the provider of water purification services will likely face significant headwinds this year.
Although the longer-term picture is positive, the company faces notable challenges in the short term with significant operating losses and the IPO lock-up expiration on the horizon in April.
AquaVenture Holdings came to market at a time when concerns about the future of potable drinking water were at the forefront of the news cycle. Amid concerns about climate change and pipelines in the West it is important to remember that AquaVenture Holdings isn’t the first firm to popularize the water-as-service theme, and not all these offerings have held investors’ attention.
Back in 2010, several new water-related exchange-traded funds were making a splash in the marketplace. These included the equal-weighted First Trust ISE Water Index Fund and the PowerShares Water Resources Portfolio, alongside the Claymore S&P Global Water Index ETF and PowerShares Global Water Resources Portfolio.
Although all four of these ETFs still exist, average daily trading volume is anemic in all but the First Trust ISE Water Index Fund. This underscores that the theme of water investments isn’t new, and it hasn’t particularly piqued the interest of ETF investors.
AquaVenture Holdings provides water as a service to customers around the world to help them ensure that their water is affordable and safe. It offers water treatment and purification services to businesses and governments and operates through its subsidiaries, Quench and Seven Seas.
The company, which was founded in 2006, is based in Tampa, Fla., and has more than 500 employees.
In June 2014, Quench acquired Atlas, which allowed it to greatly expand its market in Boston. Quench operates in the U.S., while Seven Seas builds, designs and operates water treatment facilities in the Caribbean, Chile, Saudi Arabia and the U.S.
Before the IPO, the company raised $157.91 million in six rounds of funding, with its most recent round taking place on May 1, 2015. Notable investors include Element Partners, TPG Growth and T. Rowe Price.
The offering…