American Water to sell Homeowner Services Group for $1.275bn

American Water Works Company Inc has agreed to sell its Homeowner Services Group to Apax in a deal valued at $1.275 billion.

American Water Works Company Inc has agreed to sell its Homeowner Services Group to Apax in a deal valued at $1.275 billion. by BofA Securities, Schulte Roth & Zabel LLP and Shearman & Sterling LLP advised American Water on the deal.


CAMDEN, N.J.–(BUSINESS WIRE)–American Water Works Company, Inc. (NYSE: AWK), the largest publicly traded U.S. water and wastewater utility company, today announced that it has agreed to sell its Homeowner Services Group to funds advised by Apax in a deal valued at approximately $1.275 billion.

Upon closing of the transaction, American Water will receive $480 million in cash and a $720 million secured Seller’s Note bearing a 7% annual interest rate with a five-year term. In addition, the transaction includes a delayed payment to American Water of $75 million if certain milestones are met by December 31, 2023. The structure of the transaction enables initial cash proceeds to be redeployed into the regulated water and wastewater business to fund near-term incremental capital investments, while interest on the Seller’s Note will provide a stream of earnings over the term of the note. Upon maturity, the proceeds from the repayment of the Seller’s Note are expected to be used to fund a continually growing capital investment in the regulated business.

“American Water has successfully grown our Homeowner Services Group over the last 20 years, creating great value.” said Walter Lynch, President and CEO of American Water. “This transaction allows us to capitalize on that value creation by utilizing the proceeds to invest in our regulated businesses. As we have continuously communicated, our strategy is to operate where we can best serve customers, drive efficiencies, invest in our systems and grow our regulated water and wastewater businesses,” added Lynch. “We look forward to outlining the transaction further, as we discuss our long-term financial plan at our next virtual investor day on November 3, 2021.”

Homeowner Services Group’s customer facing brands include American Water Resources and Pivotal Home Solutions, which provide various warranty protection programs and other home services to residential customers across the country. This business currently has nearly 3 million customer contracts across 43 states and Washington, D.C.

“We believe Apax will take the growing Homeowner Services business into its next chapter and employees will transfer as part of the deal and have the opportunity to continue to add value to customers,” added Lynch.

Ashish Karandikar, Partner at Apax, said, “Having tracked the home warranty sector, we identified American Water Resources as a stand-out provider in the space. The Apax Funds have deep domain experience across the home services market and insurance and warranty product dynamics, with prior investments in Authority Brands, Assured Partners and Hub for example. We are excited to partner with the team at American Water Resources as we look to build on the Homeowner Services Group’s success to date, leveraging the Apax Funds’ transformational approach, hands-on operational excellence, and deep digital expertise to support the company going forward.”

American Water will also enter into a revenue sharing agreement that provides for American Water to receive a percentage of revenue generated from previous on-bill billing arrangements with American Water customers. This agreement will also provide an ongoing income stream as Apax continues these relationships.

American Water anticipates closing the transaction in the fourth quarter of 2021, subject to the satisfaction or waiver of customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

American Water was exclusively advised by BofA Securities, Schulte Roth & Zabel LLP and Shearman & Sterling LLP.

American Water Investor Day
Further details surrounding the transaction and American Water’s long-term financial plan will be discussed at a virtual Investor Day American Water scheduled for Wednesday, November 3, 2021, at 9:00 a.m. Eastern Daylight Time. Also at that event, the Company will discuss its 2021 third quarter results, 2021 and 2022 earnings guidance, and long-term earnings, dividend growth and O&M efficiency ratio targets, and its financing and capital investment plans. The event hosts will be Walter Lynch, President and Chief Executive Officer; Susan Hardwick, Executive Vice President and Chief Financial Officer; and Cheryl Norton, Executive Vice President and Chief Operating Officer. There will be a question-and-answer session as part of the event.

Interested parties may access the video webcast through a link on the Company’s investor relations website at Presentation slides that will be used in conjunction with the event will also be available on the investor relations website in advance. The Company recognizes its website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with its obligations under SEC Regulation FD.

About American Water
With a history dating back to 1886, American Water (NYSE:AWK) is the largest and most geographically diverse U.S. publicly traded water and wastewater utility company. The company employs more than 7,000 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 46 states. American Water provides safe, clean, affordable and reliable water services to our customers to help keep their lives flowing. For more information, visit and follow American Water on Twitter, Facebook and LinkedIn.