Water On Demand forms lending subsidiary for water projects

Water On Demand said it is forming a wholly owned finance arm to originate commercial-purpose loans for water infrastructure initiatives. The move follows a legal memo on Texas commercial lending and could give the company control over a bigger slice of the water-project financing stack.

Why it matters: - Water On Demand is trying to move beyond arranging financing and into originating loans itself. - The strategy could let the company capture more of the economics tied to water infrastructure projects. - The company is positioning water financing as a potential asset class, alongside real estate and energy.

What happened: - Water On Demand said it is forming Water On Demand Capital Finance, Inc., a wholly owned subsidiary. - The new subsidiary will originate commercial-purpose loans tied to water infrastructure initiatives. - The company said formation of the subsidiary is underway. - Water On Demand said it received a counsel memorandum on Texas commercial-lending requirements before taking the next step. - The company plans to retain that counsel to prepare loan origination documentation for the new subsidiary.

The details: - Water On Demand said water projects are typically financed by outside lenders. - The new entity is intended to originate that financing in its own name. - The company said it is building toward providing every stage in the stack of water-treatment-system financing and implementation. - Water On Demand said Water On Demand Capital Finance will serve as lender of record for commercial-purpose loans supporting water infrastructure initiatives. - The company said it develops financial and operating solutions for essential water infrastructure. - Water On Demand said it connects capital, equipment, operating businesses and recurring service opportunities in markets where conventional infrastructure development can be slow, capital-intensive or hard to scale. - More information is available at waterondemand.com.

Between the lines: - CEO Ken Berenger framed the shift as a move from a service model to a balance-sheet model. - Berenger said the company wants to build something it has not seen anyone else do in water. - CFO Cory Mertes said the company wanted legal clarity before considering the next step. - The legal memo and counsel retention plans suggest Water On Demand is trying to build the lending arm with a compliance-first approach.

What's next: - Water On Demand still needs to complete formation, legal documentation and any internal approvals tied to the new subsidiary. - Future lending activity will depend on board authorization, documentation, market conditions and other risks listed by the company. - The company also said any prospective purchaser relationships for loans would still be subject to further steps and are not commitments.

The bottom line: - Water On Demand is making a bid to control water-project financing from origination to implementation, not just advise or arrange it.