The drinking water treatment sector is changing. In the past two years, there has been a significant increase in interest from investors who are increasingly investing in clean drinking water companies. This is reflected in high M&A activity — 372 takeovers in the water sector were recorded worldwide in 2024 alone. There are already signs of optimism in 2025: More stable conditions and backlog demand among investors suggest another lively year for takeovers. But why is the market for drinking water treatment in Germany and Europe becoming more and more exciting for financial investors?
Investors see drinking water treatment as a future market
Investors increasingly regard water supply as a future-proof growth market. Water is an indispensable asset — “Water treatment and tackling water scarcity are among the main drivers of global sustainability,” says investment fund Oaktree Capital, for example. Such statements underline that ESG criteria (sustainability) and society's need for clean water are driving interest in this sector. In addition, the drinking water supply is considered crisis-resistant and relatively independent of economic fluctuations — people and industry always need clean water.
At the same time, climate changes and new legal requirements mean that investments must be made in water treatment technologies. For example, stricter limits for pollutants such as PFAS (so-called “Forever Chemicals”) in drinking water will come into force in the EU from 2026. Compliance with such rules requires new processes and equipment, which triggers spurts of innovation. Industry experts note that growing regulatory pressure and public awareness of water quality are also creating opportunities for investors to expand their involvement in the water sector. In short, water supply is becoming an investment issue because stable basic demand meets high investment requirements.
Private equity firms and family offices as drivers of consolidation
Financial investors — in particular private equity companies and family offices — who specialize in water companies are a key driver of the current M&A momentum. For example, SKion Water, the family office of German entrepreneur Susanne Klatten, has built up an entire portfolio of water technology companies. At the beginning of 2023, for example, SKion Water took over Schweitzer-Chemie GmbH, a medium-sized specialist in water treatment and hygiene in buildings and industry. According to SKion, the group gains “one of the most successful medium-sized water companies on the German market,” which significantly expands its commitment to professional water management. This example shows that family offices are investing specifically in drinking water treatment, and the acquisition of such specialists points to continued consolidation.
International private equity giants are also getting involved. Major investors such as KKR, Blackstone and H.I.G. Capital have invested billions in water technology and services in recent years. They often pursue buy-and-build strategies: Several smaller companies are brought together to form larger platforms in order to exploit synergies. One example is H.I.G. Capital, which acquired numerous equipment suppliers in the water sector via its United Flow Technologies platform and completed a successful exit in 2024 with the sale of chemicals supplier USALCO for ~2 billion US dollars. Infrastructure and impact investors are also on the agenda — such as specialized funds that invest specifically in water startups, digital solutions or plant manufacturers. The presence of such financially strong players, from private equity to family offices, who do nothing but invest in water treatment, is a clear indicator of the attractiveness of the market and is leading to a sustained wave of consolidation.
Overview of recent M&A transactions in the water sector
The attractiveness of the drinking water market is reflected in a number of sensational transactions over the last two years. A few examples should illustrate the range of deals:
Oaktree & Aqseptence (2023): US investor Oaktree acquires a majority stake in the German Aqseptence Group, a global provider of water treatment and filter technology. Oaktree wants to further expand Aqseptence organically and through acquisitions using additional resources — a typical case of how private equity supports the consolidation course. Oaktree expressly underlines the strategic importance of the water sector for sustainable growth.
Xylem & Evoqua (2023): Right at the beginning of 2023, the US company Xylem announced the acquisition of Evoqua, a leading provider of industrial water treatment, in an all-stock deal worth 7.5 billion US dollars. The merger creates a global water technology giant with a turnover of over 7 billion US dollars. This mega merger underscores the trend that major industry players are strengthening their position by acquiring specialists in order to jointly address global water problems.
Georg Fischer & Uponor (2023): Swiss industrial group Georg Fischer (GF) took over Finnish pipeline specialist Uponor in November 2023 and strategically realigned itself to focus exclusively on water and river systems. GF also sold other divisions to handle the takeover. This repositioning of a traditional company shows how a focus on drinking water is seen as a core business. GF is thus strengthening its portfolio in areas such as drinking water infrastructure, urban water management and energy-efficient building technology.
Grundfos & Culligan (2024): The Danish global pump market leader Grundfos bought Culligan's industrial and commercial division in Europe in June 2024. Culligan is known for water treatment systems; the acquired business generates over €100 million in annual sales. Grundfos is thus expanding its range of water treatment solutions and strengthening its regional presence — a step that highlights the increasing consolidation at European level.
Ecolab & Barclay Water (2024): In 2024, the US chemical company Ecolab acquired Barclay Water Management, specialized in water hygiene and digital monitoring (including legionella control in drinking water systems). Barclay (sales of around $50 million in 2023) perfectly complements Ecolab's portfolio in the area of drinking water quality and safety. This deal shows that health issues such as legionella prevention are a driver for acquisitions in order to be able to offer customers more comprehensive solutions.
Siemens & BuntPlanet (2023): Even technology companies such as Siemens are expanding their water expertise through acquisitions. At the end of 2023, Siemens acquired the Spanish software company BuntPlanet, which offers AI-based solutions for water network monitoring (e.g. leak detection, smart metering). The integration of such digital tools into the Siemens portfolio should help utilities reduce water losses and optimize network management. Digital innovations are therefore purchased in a targeted manner.
Diehl Metering & PREVENTIO (2024): The German measurement and control technology manufacturer Diehl Metering similarly invested in digital water tools and took over the start-up PREVENTIO from Bavaria, which specializes in AI-based leak management. This expands Diehl's range of intelligent solutions for water suppliers and underlines the trend towards digitization in the water sector.
Gradiant & H+E (2023): Internationalization does not stop at Germany: The water technology company Gradiant, founded in the USA, acquired a 51% majority stake in the German H+E Group (Hager + Alsaesser) in 2023. With over 100 years of market experience, H+E provides solutions for industrial water and semiconductor industries. This market entry by Gradiant in Europe shows that German water technology companies are targeting global players when it comes to gaining advanced solutions and access to the European market.
These examples illustrate: From large corporations to private equity investors — all players are repositioning themselves and driving consolidation in the water sector. In drinking water treatment in particular, the acquisitions aim to bundle know-how, technologies and market shares in order to benefit from the mentioned megatrends (sustainability, regulation, digitalization).
Market drivers: Why the drinking water sector is in such demand
What makes drinking water treatment so attractive to buyers? In addition to the factors already mentioned (social relevance, stable demand, ESG focus), structural market characteristics play a role:
Fragmented SME market: In Germany and Europe, the water technology sector is traditionally medium-sized with many specialized niche providers. These companies — often with a turnover of €5—50 million — have innovations or regional market positions, but have limited reach. For larger strategists or financial investors, they are ideal takeover candidates to form a larger integrated provider through “buy-and-build.” Oaktree immediately announced that it would expand the Aqseptence Group through further acquisitions. Consolidation here promises economies of scale and a wider product portfolio from a single source.
High investment requirements in infrastructure: Public water management is facing enormous investment requirements. In Germany alone, an estimated €800 billion will have to be spent on renewing and expanding water/sewage systems over the next 20 years. Drinking water supplies (pipe networks, treatment plants, etc.) account for around 35% of this sum. This pressure to modernize — driven by aging infrastructure, stricter quality requirements and climate adaptation — is leading to strong demand for new technologies and services. It is becoming attractive for often municipal operators to rely on competent private partners, whether through procurement or PPP models. This creates a growing market that investors see as an opportunity.
Innovation and digitization: Water treatment is changing: Issues such as PFAS removal, microplastics, energy efficiency or smart water (digital monitoring of networks) require new solutions. Many startups and SMEs have pioneering roles here — but are often acquired by larger companies as soon as their technology proves successful (examples: AI leak detection at PREVENTIO or sensor technology at BuntPlanet). Large industrial companies and investors are counting on future-proof their own range of services by purchasing innovative companies. The outlook: Digitalization and automated plant control will be drivers for further acquisitions, as the industry has traditionally been more conservative and is now being digitally upgraded.
Global climate and resource crises: Increasing water scarcity in many regions, more frequent droughts and simultaneous floods (heavy rain) are increasing pressure on water suppliers. Resilience solutions (e.g. decentralized treatment, water recycling) are becoming increasingly important. Investors anticipate that companies with such solutions will grow disproportionately in the future. For example, private equity funds invest specifically in companies that enable water reuse or efficiency improvements, for example. The transformation towards sustainable water use is therefore also being driven forward through M&A.
In summary, it is clear that drinking water is the “blue gold” of a sustainable economy, and buyers are correspondingly interested in getting involved in this sector.
Outlook: What's next?
In view of the trends described, it is foreseeable that consolidation in drinking water treatment will continue to gain momentum. Some hypotheses about market development in the coming years:
Continued high M&A activity: Both strategic industrial companies and financial investors will continue to make targeted purchases. The pipeline of takeover candidates is well filled, as many older owners of medium-sized water technology companies are faced with the question of succession — an ideal environment for sales. Recent years have shown that, despite economic fluctuations, a background noise of ~370 deals per year is possible in the global water sector. Due to the structural importance of water, this level is likely to be maintained at least. For 2025/26, market observers even expect an increase if interest rates and the economy stabilize.
Emergence of large platform companies: Continued buy-and-build strategies could create several larger water technology groups in Europe that cover many niches — comparable to what has already happened in other industries (e.g. medical technology). Private equity-financed platforms such as United Flow (H.I.G.) or Skion's EnviroWater Group are showing the way. These consolidators will also buy in across borders, blurring the market boundaries between national providers.
Stronger role of infrastructure investors: Should the public sector not be able to handle the huge investments alone, infrastructure funds and long-term investors could come into play more — whether through joint ventures in plant construction or takeovers of peripheral areas (e.g. service companies, network operation in certain regions). In some neighboring European countries (UK, FR, ES), there are already examples of private investments in the water supply sector. Germany has traditionally been cautious, but in light of the investment backlog, public-private partnerships are becoming more likely. This opens up new fields of activity for financial investors, beyond the mere acquisition of technology.
Pressure to innovate as a deal engine: The tightening of laws (e.g. EU Drinking Water Directive, PFAS limits) and the need for efficiency will continue to create pressure to innovate. Large corporations could be forced to buy in missing skills to keep pace with new standards. Anyone offering solutions to remove micropollutants or digital customer platforms for water suppliers, for example, will be sought after as a takeover candidate. The same applies to specialists in promising areas such as seawater desalination, hydrogen technology (electrolysis water requirement) or sewage sludge treatment — all of these neighboring fields are moving strategically closer to drinking water treatment.
Increasing value through sustainability: Since water companies per se have an impact on the environment and society, they will also remain of interest to ESG-oriented investors. That could keep ratings up. Projects to improve drinking water quality or availability often enjoy political backing and funding, which reduces the risk for investors. This creates a positive cycle: More capital for water treatment promotes innovation and expansion — which in turn attracts further investors.
For entrepreneurs in the drinking water treatment sector, all of this means: The market is in a dynamic phase of change. Consolidation trends and investor demand create opportunities, while at the same time, competitive pressure from larger units is increasing. From a seller's point of view, the conditions are attractive — numerous financial players are looking for suitable targets, and strategic buyers often pay high multipliers for urgently needed technology adds. Anyone who owns a well-positioned company in this sector can strategically examine how they want to position themselves in this market consolidation.
Conclusion
Drinking water treatment in Germany (and Europe) is more exciting than ever for investors. Consolidation and capital inflow will continue as clean water remains a central issue for the coming decades. Entrepreneurs in the sector should closely follow this development. It is highly likely that we will also see numerous acquisitions and mergers in 2025 and beyond — driven by the vision of efficient, innovative and sustainable water management for the benefit of all parties involved.
Major acquisitions in the water sector in 2024
Aqseptence Group geht Partnerschaft mit Oaktree ein | Aqseptence Group
Understanding new PFAS regulations in the U.S. and EU | Roland Berger
2021 Water Company of the Year - Global Water Awards
Schweitzer-Chemie becomes part of EnviroWater Group - SKion Water
Private equity's expanding role in the water sector: key players, investments and strategic exits
A look at 2023's major water acquisitions
