EXCLUSIVE: America is raiding Australia's water market.
A major US-backed company is scooping up irrigators' entitlements as part of a $500 million global water-purchasing strategy.
California-based Summit Global Management has so far bought about $20 million of Australian irrigators' water through its local interests.
Summit Global's chief marketing officer Matt Dickerson said "there were few areas where we can execute our strategy, but Australia is one of them".
"There's a need for liquidity in the market and we're in a position to monetise these assets and act as a water bank as well."
However, the US-backed company will have to compete with the Federal Government for high-reliability water entitlements in an already thin market.
Mr Dickerson said Summit was aware of the Federal Government's water-purchasing program for the environment.
"But our intention is to lease it (water) back to farmers," he said. "We're trying to be partners with farmers."
Water brokers across the Murray Valley told The Weekly Times they had been approached by Summit's Australian representatives to purchase water.
Brokers estimated Summit had already purchased about 10,000 megalitres of high-reliability water entitlements, worth more than $20 million.
"I'd say they have at least that" one broker said.
Another broker told The Weekly Times the Summit group had approached several brokers looking for 8000 to 10,000 megalitres.
"They're looking mainly for Victorian (Murray and Goulburn) and South Australian (high reliability) entitlement," a broker said.
"In fact, it's been good.
"They've been in the market at times in the past three to four months when the Federal Government wasn't. And they've paid a good price $2300 (a megalitre of entitlement) plus."
Three directors of the San Diego investment firm Summit Global Management, John Dickerson, Robert Anfuso and Michael Schlehuber, have established an Adelaide subsidiary, Summit Water Holdings Pty Ltd to purchase water.
Summit Water Holdings is in turn owned by Summit Water Development, which is a Cayman Islands registered partnership in the names of Mr Anfuso and Mr Dickerson.
US Securities and Exchange Commission documents show Summit Water was set up last year to raise $500 million in securities to invest in a "global portfolio of wet water assets".
The US SEC documents go on to state: "The envisioned portfolio of wet water assets is intended to primarily consist of water rights/entitlements in their various forms."
Investors in the $500m of securities on offer must be prepared to invest a minimum of $5 million.
In Australia, Summit Water Holdings is chaired by South Australian Graham Dooley, who said the company had made some "observations" in Australia.
But Mr Dooley refused to discuss what water had been purchased or from where in the Murray Darling Basin.
"We're not ready to publicise anything," Mr Dooley said. "It's a private fund."
"It's a mistake to think the investors in the scheme were just from the US," Mr Dooley said.
He did say Summit was very aware of what he called "change-in-use water transfers", which led to eight to ten-fold increases in the price of water, once it was transferred from rural to urban communities.
Mr Dooley said Adelaide was reliant on the Murray River for 90 per cent of its water during the current drought and Melbourne was connecting to the Goulburn River.
Summit Global Management's web site states "water is still abusively undervalued relative to its real economic worth".
"Combined with the vigorous demand and climate-related market drivers that are now becoming globally and undeniably apparent, hydrocommerce presents a very compelling investment theme for the predictable future," it adds.
Summit Global Management's strategy also states: "professional investors are just now starting to recognise the strong underlying business fundamentals of hydrocommerce as an amalgam of traditionally defined industries.
"Water has historically proven to be an attractive non-cyclical opportunity, and the current reality of exploding demand coupled with diminishing supplies suggests an increasingly compelling and persistent investment theme."
- ATOP THE SUMMIT
- John Dickerson, who began his career as an international economic analyst for the Central Intelligence Agency.
- Robert G. Anfuso, who founded Group Triton, an investment advisory firm in global water and wastewater industries.
- Michael J. Schlehuber, a former hydro-geologist who developed water resources for sale to municipal water providers in the US.
- Graham Dooley, chairman of Summit Water Holdings Austrlia, a former managing director of Adelaide-based United Utilities Australia.
SUMMIT Global Management is a San Diego-registered investment adviser run by managers and directors with experience in the US water industry. The men behind Summit Global Management are:
