Xenon AIFM has agreed to sell water treatment group Sostelia to Italian multi-utility Hera in a €138m transaction, marking an exit for the private equity investor from the industrial water services sector, Reuters reports.

Hera said the deal, which includes debt, will strengthen its position in the treatment of industrial and civil water. Once fully integrated, Sostelia is expected to contribute more than €20m to Hera’s consolidated EBITDA, excluding additional synergies.

Sostelia is currently 65% owned by Xenon through its Xenon Fidec fund, with the remaining 35% held by entrepreneurs linked to the operating companies within the group. Rothschild acted as financial adviser to Xenon on the sale.

The acquisition forms part of Hera’s strategy to expand regulated and infrastructure-like businesses that offer stable cash flows and long-term growth potential, particularly in sustainability-linked services.

For Xenon, the transaction represents another realisation from its Italian portfolio, as strategic buyers continue to target specialist environmental and infrastructure assets amid tightening regulation and rising investment requirements.

The deal highlights ongoing private equity interest in water and environmental services, even as utilities increasingly look to acquire scale through bolt-on acquisitions rather than organic expansion alone.

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