Who Owns Your Water and Who Wants To?

[00:00:00] Speaker A: 1923. That's when a small town water company in West Virginia said its pipes were worth more than the regulators claimed. The state's Public Service Commission basically had frozen the towns into pre war rates. Rates that really no longer covered the cost of capital. So what happened? The company sued. Eight Supreme Court justices ruled in its favor. They wrote the rule a utility must earn a return sufficient to attract capital and maintain financial integrity. That sentence, the Bluefield standard, still governs every rate case filed in the United States today. It was the first time a court told regulators that they couldn't just set whatever rates they wanted. One of the most consequential regulatory decisions in American legal history. Not just for water, but for every regulated utility. So. So it impacts American water. Essential utilities, California water services, they're all priced against a century old Bluefield, West Virginia pipe dispute. Let's let that sink in for a moment. I am Rhys Tisdall and this is the future of Water which we talk about. All the ways which companies, utilities and people are addressing the challenges and opportunities in water. This is old school. This is episode 145. And today I've got Megan Bondar back on the podcast today. Megan's been deep in the weeds on the US Utility ownership and M and A scene. And honestly, at this point she probably knows more about the data than anybody else. So look, everybody wants to know about what's happening with American water and Essential, what are the long term impacts? And I think we'll touch upon that. It's a $63 billion deal. It matters, we get it. But that's not what we're only talking about today. What I'm hoping we're going to talk about and get into is everything underneath that Greenfield versus peer to peer, meaning Americans buying essential, their peers. But what about the real consolidation that's happening? How much is really taking place across us, why the geographic map looks completely different from Pennsylvania to Texas to Florida, and also who might be showing up in this market that wasn't here five years ago. So I'm gonna probe into all these details and Megan and see what she's got to give. So that being said, let's get to Megan. All right, so I'm joined here by Megan Bandar. Meghan, what's going on? [00:02:36] Speaker B: Yeah, things are good. Rhys, how's everything with you? [00:02:38] Speaker A: Pretty good, pretty good. You know, World Cups here, World Cups in Boston, French team, we just got out of a meeting. They're staying around the corner, excited about that. In relative terms in Boston, it's Hot as Hades. So summer is here, but you know that as well as I do because you're also in Boston. So let's just jump into it. We just got out of a meeting talking about this, so there's no time like the present. So for all the listeners out there, just to give everybody a heads up. So Bluefield tracks or has tracked nearly 1600 utility MA transactions in the US going back as far as 2015. And we've not only recently released our quarterly review, but more importantly and maybe more impactful is we've released a new investor and utility report looking at things like market share. Where are these investor in utilities going? What are they doing? So let's get into it, Megan, and maybe let's just start at the top. So what is an investor in utility? Who are the players we're talking about? So people, when we drop names, they, they'll know what we're thinking and really why does this matter in the market? [00:03:58] Speaker B: Sure. So starting off with the definition, in the context of our analysis, an investor utility is a privately owned water or wastewater utility operating in the U.S. so these companies generally operate as for profit entities regulated by state public utility commissions. And these agencies oversee operations such as the rate setting process. So in these proceedings, the IOUs make a case for rate adjustments and then receive a rate of return based on their invested capital. So what this means is that dollars spent on infrastructure investments are consequently absorbed into the rate base, which thereby incentivizes these companies to finance capital improvements across their systems. [00:04:43] Speaker A: And so when we look at it, so you, you know, how many are we looking at and what share of the market do they make up? [00:04:52] Speaker B: So we really hone in on the top 20 IOUs by connection served and they make up around 5% of water and well, they serve 5% of water and wastewater customers across, across the country. So it's a small percentage overall of the sector. But these major players are driving the game of scale in system ownership. [00:05:13] Speaker A: Right? They're the ones. I mean there are utility public utility mergers and annexes and such, but these are companies like you said, for profit driven and they're acquiring systems. So when we look at the M and A activity, so we're looking at top line, about 2 million connections changing hands since 2015. So we've broken this in the two primary buckets. Why don't you give us a little bit of detail about these buckets? Because I think this is something we haven't done in the past and I think it's really telling about the scale the size of consolidation activity in the US market. So give us a little primer. [00:05:56] Speaker B: So these two buckets refer to two different types of inorganic growth strategies for these companies. There's peer to peer transactions, which are just what they sound like. So leading IOUs acquiring connections from another leading IOU, while greenfield transactions involve leading IOU buyer acquiring assets from a non IOU system. So this could be a smaller privately owned buyer or a municipally owned system. [00:06:23] Speaker A: Yeah. So a good example, you tell me, who are some recent examples of like a peer to peer that for definition's sake? [00:06:32] Speaker B: Sure. So what's really taking up the headlines currently is the American Water Essential merger. But also recently it was announced California Water Service is acquiring connections from Nexus Water Group. In the past we've seen the Veolia Suez merger. So those are a few that really stand out. [00:06:50] Speaker A: Okay, so 2 million connections, what's the split? When you look at sort of the end of 2025 numbers, how does it break out? And then also what does it look like pending? [00:07:00] Speaker B: So over the past decade, just over half of the connections acquired by leading IOUs have come from pure assets. And this ranges from full scale buyouts to strategic asset divestments. And these type of transactions tend to emphasize scale, geographic expansion and capital efficiency. But if we look at the pipeline, we see a lot of, you know, the peer to peer deals are dominating by connection, you know, by connection count, the American Essential merger makes up over a million of the connections in the pipeline. And we have around one and a half million being tracked currently in pending and announced deals. [00:07:36] Speaker A: Yeah, and so that's a pretty. What's the right word? I mean, that's so I don't want to. Anomalous. Right. That's an eight hound, 800 pound gorilla, basically acquiring another slightly smaller but still heavy gorilla, for lack of a way to put it. All right, so yeah, I think that's sort of why the pending looks that way. But also I think, you know, it does kind of reveal how much real activity is happening. And I know this is a topic, privatization, consolidation, regionalization. This is something that can get some of the public really animated. So peer to peer is less than half of that deal flow that we see. So less of the total that we've seen. So peer to peer is faster, it's cleaner. Right. If you can go buy, if you're trying to grow, you can go buy a peer. That's pretty easy. But it's not actually growing the market, that's not actually consolidating the market. And it is on the margins because you acquire a peer that's also been consolidating, you've picked up some of theirs. But Greenfield is harder. Right. And that's some respects where the real action is. So if you care about private sector expansion, that's kind of what everybody's animated about. Who's actually doing the Greenfield acquisitions and who's doing it well. And what does it take to do it? [00:09:08] Speaker B: Yeah. So Greenfield acquisitions are really interesting area to break down because they range considerably. So one piece of the puzzle is acquiring smaller. Privately owned systems tend to be smaller scale systems under capitalized. And these sort of acquisitions allow the buyers to circumvent politically sensitive environments of acquiring municipally owned systems. So the buyers involved in these type of transactions, central states immediately comes to mind. Also, Undine in Texas are both PE backed and known for exercising this go small strategy. And on the municipal front, where we're seeing these leading IOUs acquire publicly owned assets, Essential Utilities and American Water dominate this front. Over 85% of their combined connections acquired in utility M and A have come from municipally owned systems. And of the share, 75% of these connections have been in Illinois and Pennsylvania alone. [00:10:10] Speaker A: Yeah. So the market really is bifurcated in some respects. I think it's a bit of a range. Right. You mentioned the American Essential going for bigger fish, mainly municipal. You've got these private equity firms, private equity backed firms really being aggressive on the lower end. So I think we've called it like subscale. Right. Smaller systems, but they probably have two, three, maybe four employees. In many cases they're under resourced, undercapitalized, they still have asset management to take care of. They've got their regulatory issues to deal with. And so if they're part of a small community, maybe serving 300 homes, you know, that's where they're seeing an opportunity and that's where the growth is. So basically buying up small fish after small fish, whereas the larger players are doing so and there are players in between. But we've illustrated all of this in the report and really, I think done a good job of breaking down. So a lot of credit goes to you for that. So let's talk a little bit about geography though, because this is something that's not only interesting, but the top five M&A markets, correct me if I'm wrong. Pennsylvania, Illinois, Texas, Louisiana. I have Florida on my list. Is that correct? Or is it early stage? And they're not the same at all. [00:11:38] Speaker B: And as a note. Yes. And these are outside of Major mergers. So typical utility M and A versus like, you know, the big deals like the Veolia Suez and American Central type deals. [00:11:49] Speaker A: So how do they differ as far as deal flow and activity? Are there certain things that are driving them one way or another or are there any nuances to these particular states? [00:12:00] Speaker B: Sure. So even among the top five, there's pretty distinct dynamics going on. So in Pennsylvania and Illinois these are pretty well entrenched, concentrated markets dominated by American Water, essentially utilities. So it does make it harder for other players to establish scale in these states. Although York Water Company is a notable exception. And due to concern monopolies in these states, private activity is under particularly heavy scrutiny. In Pennsylvania and Illinois. We've been seeing activity in Illinois, particularly as of late. Citizens Utility Board is fighting the ongoing American Essential merger. And there's an act currently pending in the state legislature which is the Municipal Water System Repurchase Act. So you know, all of these actions are causing real headwinds that are posing friction. [00:12:52] Speaker A: Yeah, I think that, you know, you said the word monopoly. I mean I think it. What are the impacts? And I, I don't know if I'd go so far as to say nationally is that. Well, I would say it could be a potential problem. Right. So when we look at the numbers, we're looking at American Water among the top 20 investor owned utilities now ramping up to anywhere between 53 to ultimately 55% market share among the top 20, which is really significant. I mean they're so far out ahead of the others as far as connections go, it's pretty amazing. So I think that, and I had conversations publicly and behind closed doors about whether I think it's a good thing or a bad thing. Happy to talk about that on another day other than the podcast right now. But when we look at the hottest market. So what's the hottest market in terms of activity? [00:13:50] Speaker B: Texas definitely. [00:13:52] Speaker A: And yeah, number a lot of deals. What's the reasoning for that? [00:13:57] Speaker B: Yeah, a lot of buyers, a lot of deals. Just thinking about all the rural under capitalized subscale assets in the state. And over the past decade since 2015, we've seen nearly 200 unique buyers exercising deal flow in the state of. To describe the market dynamic, it's fragmented, competitive and just overall an attractive addressable market. But it is important to note that the regulatory environment here does pose an obstacle for buyers. The average utility M and a deal spends just over a year in the regulatory process. So going through this process, it's important to be a bit insulated from Regulatory drag. So having strategies and maybe even unregulated revenues to help buffer from those vulnerabilities. [00:14:48] Speaker A: Yeah, and I think to note that that's one of the things that we do. We do track when applications are filed for consolidation, how long it takes. We're tracking it on the calendar basis. And Texas, yeah, far exceeds all the others, I think by definitely months, three, four months on a good day and maybe beyond that. So I think that definitely makes a difference. And so what about ones to watch? [00:15:17] Speaker B: So I think Florida is up and coming and I mean it is a top five market, you know, just rounding out the top five. But I think it's increasingly one to watch as well because all eight pending deals in the state were just filed since late last year. And the state passed fair market value legislation just a few years ago back in 2023. And earlier this year we saw the first deal leverag this legislation come through the pipeline submitted by Nexus Water Group. And Central states has also announced they're interested in filing a fair market value acquisition in the state as well. And you know, this is a state with significant capital improvement needs. It's particularly affected by climate events such as hurricanes and sea level rise. Just really forward looking. But I think this is a state where there are needs to be addressed, particularly capital improvement needs. [00:16:14] Speaker A: All right, so speaking of some of those states, there's no one size fits all approach. We've talked already a little bit about this and the reason I think this is important for Bluefield, Bluefield clients, but also hopefully listeners and that is people are interested in the IOUs for a number of different reasons. One, just to understand how much consolidation is happening, at least among the IOUs. That's simply put, we track that, we've talked about that. Secondly, it's interesting because if you're a vendor, if you're a service provider and you're looking for market opportunities, an addressable market that hopefully reduces in which there's reduced friction for sales and deploying those services or hardware and equipment rather than going utility to utility to utility. In some cases you can go work out somewhat of a, some form of a framework agreement potentially. You know, upstairs among these companies. I think that's why people like them, it's pretty transparent as well. You know, they do file rate cases, they sort of lay out what they want to spend their money on. They justify it, you know what it's going to look like. So which leads me to sort of the playbook divergence. Right. So you've got central states doing, I don't know, was it 50 deals or so in any given year? They do a lot, maybe more. I could be if I'm wrong. And then you've got a company like epcore Core who's doing they're, I think primarily Arizona based. They're doing 1, 2, 3 deals a year over the past couple years. So not many at all. But these are just completely different businesses and approaches. So does one model win or is there room for both? What's your take when you look at the quadrant map, as we do in our analysis, to kind of break out how they're approaching the market. [00:18:16] Speaker B: So I would say there's definitely room for both. Playbooks do differ. As you were saying, even amongst the very top tier players in the country, you have Central States with its incremental acquisition strategy, very high frequency, a bit more low impact, just snapping up these subscale assets across the south and also sometimes partnering with local O and M providers to keep up with this heavy acquisition volume. And then Meanwhile, you mentioned Epcor, which is Whale Hunter and has only closed about five deals since 2015. But Epcor is the largest player in Arizona, which is a hot market for utility M and A, and acquired Johnson Utilities around six years ago, which is about 70,000 connections. [00:19:06] Speaker A: They were also encouraged to purchase Johnson Utilities, if I recall, by the state itself. [00:19:13] Speaker B: Yeah. And then Epcor actually even originally entered Arizona by acquiring assets from American Water like all the way back in 2011. So, you know, they're no stranger to these, you know, massive deals, but they're a selective deal maker so they're locking up a geography with just a couple of transformative deals. So central States, epcor, you know, two very different ends of the spectrum that are executing very different strategies. But both of these strategies do work in the right conditions. [00:19:42] Speaker A: And then what about in between? So that's where it feels like there's a bit more action. So I think the cow waters of the world, the Nexuses of the world, what's their position in the market? [00:19:55] Speaker B: Sure. So these are multi state players in the country that are averaging between three to four deals a year. So Cal Water we mentioned a bit earlier in the episode, but their position to enter Nevada and Oregon by acquiring these operations from Nexus Water Group, which is further concentrating the leaderboard in the West. Then you have Nexus, which is in the process of divesting roughly 15% of its national customer base, essentials in the process of being acquired by American. And then you have nwnatural, which is placing greater emphasis on organic growth than it has in the past. So we're definitely seeing some portfolio reshuffling going on and these players evolving in their strategies. [00:20:42] Speaker A: So yeah, I think there's activity happening. And then on the margins, you've got a couple newish players who've entered the space because of divestments and such, who are the new players to look out for. So if you're looking at the top 20, who are new players on the margins that we're seeing, so they don't [00:21:01] Speaker B: necessarily crack the top 20. But Unitil Corporation, the natural gas provider in New England area, they just acquired around 23,000 connections from Aquarian Water in New Hampshire, Massachusetts. So they're one to watch because the Penetrack Corporation is the last company in the top 20, around 40,000 connections and unitil has around 23. So not quite enough to make the top 20, but still enough that they're utility to note. [00:21:33] Speaker A: All right, so where does this go? Right, so the IU market, we're sitting at 5% the number. And I've said this before, but I'll say it again, if you go to the EPA data, it's going to say 15 or so percent of the US market is privatized. It's a bit misleading, at least as far as we look at it, in that it includes community developments that are privately owned. You know, housing developments, could be a trailer park listed as private. But when it comes to the IOUs, we're really looking at about 5%. So it's not a lot. 5% of 330 million people serve 310 million. I don't remember what the total number is served by service provided with service provisions by utilities, but that's been the number for a while. Is there a path to meaningful market share expansion or does the political environment just cap it at some point or unlock it? What's happening and what does it look like in the future? [00:22:37] Speaker B: I think a big thing to consider is just how fundamental capital investment is to the IOU business model and just considering how much of a challenge it is to finance capital improvements in this day and age. So I don't think the IU market is close to being capped because of this need. So across eight publicly traded IOUs in this analysis, capital expenditures rose from around 3.1 billion in 2020 to 5.3 billion at the end of last year, which is around 70% increase. And meanwhile, when you look at the public spenders on infrastructure in the sector, you see that total expenditures largely favor opex, or rather operational expenditures. So the gap between the leading private spenders and public financing is widening water. Utilities have low depreciation rates, which means that deferred capital improvements can snowball and often do snowball into higher costs over time. So this is among the most durable long term arguments for utility consolidation. [00:23:43] Speaker A: Yeah. And the capital is needed. Right. If the public's. And we're not picking sides here, we're just sort of looking at the numbers and what it says. But I think everybody across the water industry would say we need to be investing in infrastructure. I would also argue that it provides jobs. America needs jobs. It provides revenues to, you know, all walks of life and it provides benefits to everyone. So that's one aspect. And then what's the role of fair market value legislation? Is it real? Is it really driving activity? And maybe in brief, where is that happening? [00:24:22] Speaker B: So it's certainly a policy influencer. So what fair market value legislation does is it, you know, does facilitate acquisitions of distressed systems by, you know, raising their purchase prices. So since 1997, around 13 states have adopted fair market value legislation. Most recently this is in Florida in 2023 as well as Texas in 2019. There is serious backlash to this policy. Just bringing back Pennsylvania, Illinois, numerous repeal proposals suggested in Pennsylvania. And also last year as well, there was a policy piece introduced to halt privatizations for a year. Currently, Illinois is proposing for greater transparency in fair market value proceedings, which includes greater opportunities for engaging the public in having a say. [00:25:18] Speaker A: Yeah, it's never clear cut. I think everybody needs to recognize that. I think that's one of the reasons that whether it be private equity. I know I mentioned Science Capital and Ridgewood as being players in the space, but they're one of the few. I know there's. I think Bernard is active in the market as well. And then was it JW Water? JW holdings in Arizona? [00:25:44] Speaker B: Yeah. So PE is definitely, you know, big topic in the competitive landscape because JW Water holdings was a new addition to the top 20 last year and they entered these rankings by being acquired by, you know, portfolio of CVC Diff. So, you know, PE is pretty influential in, you know, reshuffling the rankings here and there, even when central States. Well, signs acquired a majority stake in Central states back in 2018. Ever since then, Central States acquisition activity has boomed and you know, we're seeing IOU engagement in states that traditionally have not had much of it. So, you know, such as like Mississippi and Arkansas. [00:26:24] Speaker A: Yeah, and this is where I struggle and I don't have the answer specifically because it is going to be case by case. But the argument against privatization or these players coming in is that they acquire the system and then the cost of the acquisition is rolled up into the rate base. And so they're basically being paid to acquire it. At the same time, you know, the IUs argue, well, we have to do also have to do a number of different upgrades. In some cases rates are frozen. I know the IUs also argue that they pay taxes. Right. And so they're paying another bill that is being unaccounted for in the discussions in many cases it's complicated. I know there's a lot of calls for, you know, community led consolidation or roll ups of systems. And it is so political. Right. I think there are a lot of issues. You know, sometimes, you know, it's not just the buyer doesn't want to be bought by an IOU or even a public rolled up. Sometimes the public doesn't even want to take over the small system because more often than not, if you're willing to sell, you probably already have problems or you have some stresses that you're trying to get off your plate and that's the reason to do it. But the bottom line is 49,000 drinking water systems, of which 65% of them are within three miles of another, is pretty significant. And that doesn't even include all the way the 23 or so thousand wastewater systems out there. So lots to be said, lots to do. But yeah, I think just broadly speaking, like I said my takeaways, Megan, and correct me if I'm wrong, consolidation's not as big of a deal as everybody acts like it is. It creates a lot of noise. There are players doing it. But you know, in terms of scale, it's not huge. It should be bigger in many respects. Right? Because there is a need for capital resources, investments in infrastructure across the board, whether you're public or private. And I think it's an opportunity. Right. I think that's how we help clients also is that companies are trying to figure out ways to get into the water market. And the IOUs do represent, while a small slice, an opportunity to either secure a foothold or just scale up within that slice and maybe even go broader than that. Makes sense. [00:29:03] Speaker B: That makes sense. And just few thoughts on the consolidation pieces. We've been going through these utility M and A filings on a quarterly basis for over 10 years now. And a lot of the activity we do see is that private to private deal flow, private buyer acquiring already privately owned assets. So private privatizations of municipal assets make up a small share A very small share of the deals, of the deals we see on an annual basis. So on the consolidation piece, a lot of it is private to private. [00:29:37] Speaker A: Yeah. So it's happening within that, if I'm hopefully not confusing the listener, but it's happening within that 15% share of the pie. Right. The EPA says 15% of systems are privately owned. So most of the deal flow, 60 to 70%, if I'm, if I'm right, are within that small share. The munis are publicly owned. More often than not, they're kind of like I said, on their own. [00:30:06] Speaker B: Yeah. Because the real. It's interesting looking at utility ownership by connection served and then facility count, because on the facility count side you see more of the private participation. But you know, just thinking about how highly fragmented the US water sector is, there's so many of the very small to small system serving populations under 3,300 people. So, you know, it's those systems that, you know, we're seeing a lot of private buyers acquire. But then by population served, that's where municipalities and publicly owned systems really dominate. [00:30:42] Speaker A: And the data shows that the private systems, the small private systems in these communities, on a violation basis, their numbers are higher than the others in terms of nominal numbers. Like how many systems have health based violations. That's where the biggest challenge is. It's partly because they're small, partly because they can't keep up. It's a lot to manage the water system. So I think that's part of it. And then I think as time goes on, even if you were to consolidate, you know, I was having a conversation last week about this. The, the list is growing faster of challenge systems than we can even take them off the board for consolidation. So. And there are different forms of consolidation, like you said, you know, there's private to private, there's private to public, there's public to private, public to public. I mean, there are different permutations about how these systems can be rolled up. Not playing favorites here. We're just looking at the numbers and so where's the action? We definitely see the IOUs making more deals on a, you know, system by system basis. But that's their business. I think the other part of it is they're also regulated. I've said that before. These IOUs do have to go to the utility commissions, whether they're rubber stamped or not. That's always the argument or that can be made, but at least they're having to. I mean, they're spending a lot of money on these rate cases too. When you're in Pennsylvania or Illinois, these companies are spending real money putting together the rate cases to justify what. What their spend should or could be. [00:32:27] Speaker B: Yeah. And that's another reason, too, why it's important to call it regulatory drag, you know, because in terms of the rate case filings as well as the utility M and A proceedings, because you're right. Like, you know, a lot of, you know, time and money as well as other resources go in, you know, to these regulatory proceedings. So when they're, you know, particularly drawn out and, you know, longer than the national average, that's where, you know, real challenges can occur. [00:32:52] Speaker A: Yeah. No, that makes sense. Well, Megan, this is awesome. I think the report, you've been digging into this for several years now, I think even since you started a bluefield and can. I don't know if we can pry it out of your hands and let someone else have fun with it, but it is super interesting. We do work with a number of these companies. I think the report you put together is fantastic. We. We actually had a team call this morning just to talk about it and walk everybody through the findings and a lot of the data, and it always stirs up conversations. One and what it all means, but where does. Where's the market heading and why should people care? So thanks, Amain, for that. I'm going to set you free on a World cup weekend where it's warm. You probably. I don't know if you'll be watching soccer, but you'll probably be playing tennis or sailing or something like that. So enjoy the weekend and thanks a million for being on the future of water. [00:33:53] Speaker B: Yeah, thanks for having me back on, Reese. [00:33:55] Speaker A: All right, take care. All right. That was awesome. I told you. Megan knows a lot. She knows a lot of details, for sure, but also she's able to sort of walk us through what's happening in a space that we track on a quarterly basis, and it's really interesting to see how it unfolds. We get a lot of questions about this space not only from the IOUs themselves, but also a number of vendors and companies that are trying to figure out what that growing but still somewhat fragmented landscape looks like, because they see it as an opportunity. You can work with American water within one state and work multiple systems, as opposed to going door to door for every system. Not always the case, but it's always a big question. All right, so that being said, after that good conversation with Megan, let's talk about what caught my eye this past week. Well, one deal caught my eye this past week. And it's Warren Equity Partners just acquired USG Water Solutions. So it's reportedly around 14 times EBITDA, which implies a valuation of $600 million. That's the guess, so don't hold me to it. So what I think is also interesting, there were reportedly more than 50 bidders for the company. That's what I heard. So that's not a quiet transaction in any stretch. So usg, it's really not a flashy tech company that everybody gets excited about. It maintains water storage tanks, rehabilitates treatment plant structures, and does inspections and such. So it was founded in 1963, carved out Veolia in 2023 after the Suez acquisition, and then once again, it sold in less than, I think, 28 months. So it hasn't been a long time on its own. With Turnspire, the business does kind of the unglamorous work that keeps water infrastructure running between major capital projects. So why does it matter? Well, infrastructure maintenance, kind of, to reiterate that point, is really an investment theme, particularly among financial investors. They used to chase replace, replacement and new construction, but I think what we're also seeing is that they're betting companies that help utilities get another 20, 30 years out of what's already in the ground. So it's really the services play that they're targeting, particularly if they're recurring or ongoing contracts. Consolidation in water services, it's definitely far from over. So highly fragmented recurring revenues, nationwide customer bases. USG is a good example. It's a platform. It's probably not an endpoint for Warren Equity and what they do with it. Expect more deals in asset management and rehab and inspection to come out of this. Warren is already on their fourth investment and closing in on a $2.8 billion fund. So they're definitely not done. And sort of to reiterate that even further, Warren has turned this into a repeatable playbook. It backed Hydramax usa, that was a pipeline data and condition assessment specialist, and it later sold the control stake to Industrial Growth Partners in 2021, it acquired stormwater systems provider Stormtrap in, I think, 2018 and exited that to PSP in 2022, created USA Water, or US Water, in 2020, around the PSI Environmental O& M platform roll up. So I thought that's interesting. And then now with this $2.8 billion infrastructure services fund, they're adding USG water solutions. So they're a real player in the space. So it's always interesting to see how these players are moving in and out or you know, from stone to stone across the water market. Really interesting. And Warren Equity is one of those players. So that's what caught my eye this past week. I thought it was really interesting. All right, that's going to do it for episode 145. So excellent to have Megan on, but also never to be left out. Many thanks to Mike Gaylor, Ryan Sullivan, Steph Aldott, Kelly Talbot, and all the Bluefield team of water experts that jump on these podcast episodes to share their thoughts, their perspectives and what they're seeing in the market. None of this happens without them. Whether it be on the mic or behind the scenes, everybody seems to know what to say and how to get the information onto your devices. So as always, if you've got topics you want us to dig into, reach out to us@water expertsluefieldresearch.com those of you who have done so. Thanks a million. Really appreciate it. Keep it coming. And this is episode 145, and as I'm going to say more and more, and I've been saying it for a while, there's no better time to be in the water business. This is the future of water from Bluefield Research. So until next time, be well, be safe, and take care.