New Financing Architecture: From Greenfield Projects to PPPs and Asset-Backed Securitisation

Across large parts of the Middle East and Asia, entirely new water infrastructure for public water supply is being planned and built. Rapid urbanisation, economic growth, population increase, water scarcity and climate change are forcing governments to expand and re-design their drinking water systems at scale. (OECD)

This situation is very different from Western Europe, where water networks are largely in place and investment focuses mainly on rehabilitation and efficiency upgrades. In many growth regions, the task is more fundamental: building new waterworks, new transmission lines and new distribution networks for millions of people who are not yet connected or only poorly served.

For professional investors, this shift translates into a growing pipeline of greenfield water infrastructure projects – and a strong demand for private long-term financing alongside public budgets.

Where new public water infrastructure is emerging

In high-growth economies, several drivers are converging:

• Urbanisation – expanding cities require new water treatment plants, storage and distribution systems.
  

• Rising demand – industrialisation and higher living standards increase per-capita water use.
  

• Water stress and climate change – droughts, changing rainfall patterns and over-used groundwater resources force utilities to develop new sources and more resilient systems.

As a result, governments and utilities launch:

• new surface water treatment plants and wellfields,

• major transmission mains and pumping stations,

• and programme-based investments in urban and peri-urban networks.

These are long-term, capital-intensive infrastructure projects for public water supply – not temporary solutions.

From structural needs to concrete project pipelines

New infrastructure does not start with a single construction contract. Typically, countries and regions first develop:

1. Water master plans – long-term strategies for securing water supply and coverage.

   
   

2. Prioritised project lists – specific plants and networks to be built or expanded.
   

3. Feasibility and preparation – technical, environmental, financial and legal work, often led by utilities and specialised engineering consultants.
   

4. Tenders – large EPC or PPP tenders for the design, construction and, in some cases, partial operation of new assets.

From an investor perspective, this means that project pipelines are real and structured, but also that development cycles are long. By the time a project reaches tender stage, it is embedded in policy and planning frameworks – and has become a serious candidate for private co-financing.

Why private long-term capital is needed – and welcome

Globally, the estimated financing needs for water infrastructure run into the trillions. The OECD puts cumulative needs for water infrastructure at USD 6.7 trillion by 2030 and up to USD 22.6 trillion by 2050. (OECD) Public budgets alone cannot close this gap.

In many countries:

• water tariffs are limited by social considerations,

• fiscal space is constrained,

• and development banks can only cover part of the required volumes.

As a result, utilities and public authorities increasingly look for private co-financing – especially in projects where long-term payment streams from public entities can be clearly defined and structured.

This is where PPP structures come in.

PPPs: private financing without privatisation

Public–Private Partnerships in the water sector are not about selling utilities. Instead, they are about splitting roles and responsibilities in a way that allows private capital and expertise to support public water services.

In our PPP models for new water infrastructure:

• the public side (state, municipality, public water utility)

  • keeps the mandate and responsibility for water supply,

  • remains owner or ultimate controller of the assets, and

  • sets the framework for tariffs and service levels.

• the private side

  • designs, builds and partially finances the assets (like treatment plants, key process technologies),

  • may take on defined operational or performance responsibilities, and

  • receives long-term payments from the public counterpart based on availability or service.

For professional investors, this architecture is attractive because:

• the counterparty risk is linked to public utilities or authorities,

• revenues can be structured as predictable, long-term cash flows,

• and involvement is focused on infrastructure and financing, not on tariff politics or full utility operations.

  
  

Crucially, water remains a public service – PPPs are a financing and delivery tool, not a privatisation of the resource.

Standardised structures and asset-backed securitization

To turn individual PPP projects into an investable theme, standardisation is key:

• standardised contractual frameworks for technology and service components,

• harmonised risk allocation between public utilities, technology partners and investors,

• and comparable documentation across different projects and countries.

Grasshopper focuses on building exactly these standardised structures around new public drinking water infrastructure. Within PPP frameworks, this enables:

1. Clear segmentation of the technology and service modules where private investors participate.
   

2. Long-term payment claims from public water utilities under PPP contracts (for example availability-based payments or service fees).
   

3. The possibility to pool these receivables and refinance them via asset-backed securitisation.

In such a structure:

• payment claims from several PPP projects can be bundled into a dedicated vehicle,
  

• this vehicle issues notes backed by the underlying receivables,
  

• and professional and institutional investors can participate through these securities, rather than taking direct single-project exposure.

Asset-backed securitisation thus becomes a refinancing instrument for PPP-based water infrastructure:

• opening the door for more private capital,
  

• recycling capital from early-stage investors into longer-term holders,
  

• and creating a bridge between public water utilities with long-term obligations and investors looking for long-duration, real-asset-linked cash flows.

New water infrastructure, new financing architecture

In high-growth regions, new public water infrastructure for drinking water will be one of the defining investment fields of the coming decades. The combination of:

• structural demand for new assets,

• project pipelines based on national and regional planning,

• openness to private financing through PPP models, and

• refinancing options via asset-backed securitisation of PPP payment streams

creates a clear role for professional investors.

At Grasshopper, our work is to connect these elements – developing and structuring water infrastructure projects in a way that:

• respects the public character of water,

• supports utilities in expanding and modernising their systems, and

• offers transparent, long-term investment opportunities in one of the most essential infrastructure themes of our time.