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KKR, United Water partner for New Jersey water contract

20 Dec 2012

Global private equity giant KKR has launched an innovative partnership with United Water to handle the water infrastructure needs of the City of Bayonne in New Jersey.

The joint venture, which comes into force on December 21, will see the pair embark on a a 40-year water and waste water concession from the Bayonne Municipal Utilities Authority.

KKR and United have agreed to pay an initial $150m to BMUA to pay off the utility operator’s debt and improve its finances, and has committed to putting up another $157m for the system over the course of the contract.

KKR will fund 90 per cent of the joint venture, while BMUA will retain ownership of the system and provide oversight and standards monitoring, as well as maintaining control of rates charged to users, the companies said in a statement.

KKR made the investment through its new infrastructure fund, which was launched in May 2008 in a bid to diversify the firm’s activity away from mega buyouts as credit markets tightened amid the global financial crisis.

The fund fell short of its initial $4bn target, closing on just over $1bn in June this year.

United Water CEO Bertrand Camus said, “What is unique about this model is that it is a blend of United Water’s operations expertise and KKR’s long-term vision, which brings credibility to address America’s water challenges.

“Our commitment to funding improvements in the water and wastewater system is critical to keeping rates stable and under BMUA’s control.

“KKR has a long history of making infrastructure investments and a proven commitment to improving the operational and environmental performance of the companies in its portfolio, making it an ideal partner for this investment.”

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