Macquarie takes £1bn stake in Southern Water
Australian asset manager Macquarie today announced that it had bought a majority stake in utility firm Southern Water for more than £1bn.
The firm said that its investment would help transform the company and put it “back on a stable footing”.
It comes a month after Southern Water was fined £90m after bosses admitted dumping sewage illegally thousands of times over a five-year period.
Shortly afterwards the firm came in for heavy criticism by the UK’s environmental watchdog, which labelled its performance “consistently unacceptable”.
Southern Water provides services to 2.6m water customers and 4.7m wastewater customers across southern England in Sussex, Kent, Hampshire and the Isle of Wight.
Macquarie’s investment, which comes at the start of the new regulatory period for water firms, is equivalent to around £1,000 per household.
Over the next four years, Southern Water will invest a total of £2bn into improving its network by fixing pumps, pipes and sewers.
Leigh Harrison, Head of Macquarie Infrastructure and Real Assets, said: “Southern Water needs significant investment to improve its operational and environmental performance, and financial health.
“Without it, the business will be unable to fulfil the expectations of the millions of customers that rely on its services each day or reduce its negative impact on the local environment.
“This major £1bn equity investment by one of our long-term infrastructure funds will help put Southern Water back on a stable footing and enable an ambitious multi-year transformation plan to make essential water and wastewater services in the South East of England more sustainable and resilient.”
He added that given the transformation would take time, Macquarie planned to own its stake in Southern across several investment cycles.
An Ofwat spokesperson said: “We welcome today’s announcement of significant new investment into Southern Water.
“The new investor recognises that the current performance of Southern Water for its customers and the environment is not good enough and has committed to a substantial package of investment. With a fresh approach from a new majority shareholder, we need to see significant progress in this regard.”