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Aqua Resources Fund Limited is a Guernsey domiciled, closed-ended investment fund established to provide capital appreciation through diversified exposure to a global portfolio of water-related investments. The Company is managed by FourWinds Capital Management.
The Manager will seek to accomplish the Company's investment objective and policy by:
- seeking exposure to water-related investments on a global basis;
- seeking portfolio diversification by investing across the broad value chain of water-related projects and investments; and
- seeking to control risk through such portfolio diversification, investment vehicle selection and implementation of risk control strategies.
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No assurance can be given, however, that the Company will achieve its investment objective, and investment results may vary substantially over time and from period to period.
Diversification
The Portfolio will be diversified by factors such as geography, water sector, investment type, structure and size. The Company may invest in companies and projects in both mature and emerging markets. There will be no predetermined limit per region, but for diversification purposes the Company will invest in at least three regions of the world.
Investments will be sought in a diverse range of water sectors. Once investment is substantially completed it is anticipated that no single investment, at the time of acquisition, may exceed 30 per cent. of the gross assets of the Company. For these purposes, where the Company invests in a portfolio of assets, each individual underlying asset shall be treated as a single investment and where the Company invests by means of a holding company, joint venture or similar investment or investment vehicle, each underlying asset shall be treated as a single investment.
Asset allocation
Investments may be made within a diverse range of water-related segments including infrastructure, technology, recycling and treatment and in water-related projects such as waste water treatment, water distribution and infrastructure, water-to-energy, clean water, desalination, and others. Investment will comprise primarily direct stakes in unquoted water-related companies and projects. A target threshold of at least 60 per cent. water-related activity will be set for an investment to be considered "water-related".
Full details of the Company's investment objective and policy are set out in the prospectus published by the Company on 21 July 2008.
The Company intends to implement its investment policy via its investment strategy. Using global research and sourcing, the Company intends to build a portfolio focused on investments that offer water-related returns. In certain cases, investments may have broader applicability and possibility for regional or global scalability.
Front-end and back end water businesses
Water-related investment opportunities that will be evaluated will include both front-end and back-end water business.
Front-end water businesses are companies that focus on areas such as extracting and delivering available water to end users, providing the necessary quality level from the end user, controlling leakage, and assuring stable supply and pressure. Examples of front-end water businesses include those businesses involved in the supply and maintenance of pipes, pumps, equipment, metering, filtration, disinfection, purification and distribution.
Back-end water businesses are companies that focus on areas such as treating and recycling used water, assuring quality levels necessary to bring recycled water back into the system and disposing of unusable water and other areas. Examples of back-end water businesses include businesses involved in water recycling, waste water treatment, waste water disposal, clean water, desalination and irrigation. In addition, water-to-energy is a back-end business area that uses water and technology to generate power. Examples include hydro-electric and tidal power.
Demand and supply side opportunities
The Company will review both demand side and supply side water opportunities. Demand is driven by agriculture, industry, and household use of water. Examples include:
- in agriculture: precision irrigation, rainfall and runoff recovery, recycling;
- in industry: recycling, waste water treatment, flow equipment; and
- in household: metering, recycling, retrofitting, quality management.
Supply side opportunities include recycling, infrastructure (distribution, reservoirs and leak management), water transportation, and environmental technologies.
By focusing on direct, actively-managed stakes in unquoted investments, the Company will seek to distinguish itself from other water investment vehicles which are generally focused on public equity investments. In this way, the Company will seek to offer access to the broader universe of active water investment strategies and specifically water-related returns.
Experienced management
The team at the Manager is experienced in water-related investments, global direct investment, private equity, project finance, and mergers and acquisitions. The Manager also manages the Zephyr Commodity Fund, Zephyr Liquid Commodities Fund LLC (formerly Tellus Liquid Commodities Fund LLC), Phaunos Timber Fund Limited and Waste Resource Fund L.P. The Manager currently works exclusively in the commodities and natural resource-related real assets sectors. The Manager sources, evaluates and executes global transactions; conducts research; designs customised risk management tools; and structures portfolios specific to the particular characteristics of natural resources.
The Directors of the Company consider the global transaction experience and water-related experience of the Manager to be beneficial to the Company in the execution of the Company's investment strategy.
Direct investment strategy
The strategy of direct stakes in unquoted investment, combining water-related companies and projects on a global level, is designed to offer returns linked to global water supply and demand and to water as a value proposition. This strategy can be clearly distinguished from many water investment portfolios which are limited to public equity investments. The Directors consider the Company’s strategy to be a competitive advantage in the universe of water investing.
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