Water Intelligence reacquires franchise in South Atlanta

Leak detection and remediation solutions company Water Intelligence announced the reacquisition of its American Leak Detection South Atlanta franchise for $0.43m on Thursday.

The AIM-traded firm said the reacquisition was strategic for a number of reasons, beneficial for reinforcing its growth trajectory and more fully realising its plan to unlock equity value.

It explained that firstly, South Atlanta was a central area for creating a regional corporate presence to help accelerate development of southeastern franchises, including a couple of large franchises that could still accelerate their growth given the size of the regional market.

Water Intelligence noted the reacquisition followed the reacquisition in January of its franchise in Ontario, Canada, to create a similar regional corporate presence in northeast Canada and upstate New York.

Secondly, the franchise achieved approximately $0.32m of sales during 2018, but with corporate financial support it was expected that the territory could grow “much faster”, reinforcing the company's 2019 plan.

Thirdly, there was said to be “significant” undeveloped territory in southern Georgia as part of the franchise.

In terms of the evolution of corporate strategy, now that Water Intelligence had “significant experience” in growing corporate locations as well as franchise locations, more options were available to unlock value.

The company said it had the opportunity not only to accelerate growth in the developed part of the South Atlanta territory, but also to now resell the undeveloped territory as part of a new right-sized franchise.

Given the increasing equity value of franchises, especially because of the additional support from established regional corporate hubs, Water Intelligence said it had already received expressions of interest to purchase any new territory made available.

Finally, the current franchise owner had agreed to stay with American Leak Detection, and open a new corporate location given his experience, the board confirmed.

Water Intelligence was currently reviewing new locations to push further market capture.

Much like the Ontario transaction, it said it planned to grow from within and retain experienced managers after reacquisition.

“The first quarter has been very productive in continuing the strong trajectory that the company has enjoyed consistently over the last several years,” said Water Intelligence executive chairman Dr Patrick DeSouza.

“We aim high and deliver. We will provide a detailed update with our 2018 trading update.

“We continue to look forward to a strong 2019 building upon our record and our goal of significant and sustainable multinational growth.”