Guess Who Just Spent $700M on Water? (10 Things Investors Missed) - CRH acquires Axius Water from KKR and XPV Water Partners

So, back to April 30.

CRH's Q1 press release lands at 6 am Dublin and most newsrooms file it under building materials because that's the box CRH lives in.

But the line that's evolving this is their agreement to acquire Axios Water for approximately 700 million dollars and underneath that line, the three different parties we should introduce.

CRH itself was founded in 1970 in Dublin from a merger of two Irish industrial firms.

They transitioned their listing to New York in 2023, joined the S&P 500, and over the last decade, they grew their revenue 8% every year, maintaining a healthy 15% profit margin, of which they returned 19% to their shareholders in every year.

That's your well-established, solid infrastructure player.

Now, inside CRH, the water work primarily happens through a subsidiary called Old Castle Infrastructure, which was built organically starting in 1978 with a small acquisition in Utah and, over its 47 years lifespan, became the dominant North American precast water pipe and stormwater product operator with 79 facilities reaching all 50 US states.

So when CRH says they have a 47 years water history, that part is real, but only for transmission and storm water.

Hold that distinction in your head, because it's gonna matter in a couple of minutes.

On the other side of the deal, you have the sellers, and the sellers are an asymmetric pair.

The first is KKR, which most of you know as the Generalist Private Equity Giant founded in 1976. and I'm betting you know them because they hold $640 billion in assets under management.

The kind of firm that does everything from healthcare buyouts to infrastructure to credits.

Now, the KKR vehicle that owns Axios is called the Global Impact Fund, which is a UN Sustainable Development Goals-aligned PE vehicle, and fund one of that vehicle closed in 2018 at about $1.3 billion dollars.

And honestly, this is real impact PE.

KKR has a track record across all funds which includes Viridor in the UK waste, Northumbrian Water in UK's water and half a dozen other names, with a consistent pattern, made to large environmental platforms that they exited to strategic players or other private equity.

Now, the second seller, because Axius Water was a joint venture, is XPV Water Partners, and this one is different.

XPV is a Toronto-based growth equity and PE firm with about 1 billion in assets under management founded in 2006, which makes them the longest-standard water-only investment specialist in the global universe.

They're the OG, the granddaddy of them all.

They existed before every other water-focused fund appeared, and they moved from early stage to later stage along the maturation of their portfolio companies.

Among water founders, XPV is the firm you call when you want a later stage partner that actually understands the water sector and its specificities.

And I've hosted David Anderson, their managing partner, on several panels, but he never agreed to come on my podcast microphone.

So it's about time we do that, Dave, right? Yes, you're used to it now, but I shamelessly do my podcast invitations on camera.

But that one I already did in person several times.

So it's about time it happens.

God, you sound desperate.