Macquarie Asset Management Recaps Southern Water Services to Improve Operations

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Posted on 09/08/2021


Macquarie Asset Management has entered into an agreement to acquire a majority stake in Southern Water Services Limited. Currently, the main shareholders of Southern Water Services are JP Morgan Asset Management (40%), UBS Asset Management (22%), Hermes Infrastructure Funds (21%) and Whitehelm Capital (8%). In 2020, Southern Water Services pleaded guilty to 51 offenses related to dumping untreated sewage into the sea and was fined £ 90million. Macquarie is back in the UK water industry with his Southern Water recap. Macquarie ended its water investment in Thames Water (Kemble Water Limited) in 2017 for an estimated £ 1.35 billion.

Southern Water provides essential services to 2.6 million water customers and 4.7 million wastewater customers in Kent, Sussex, Hampshire and the Isle of Wight.

Under the deal with existing Southern Water shareholders, Macquarie Asset Management will invest, on behalf of long-term investors, including pension funds and insurance companies, over £ 1 billion in new equity to recapitalize the business and implement a more sustainable financing strategy for Southern Water. Water. The capital injection will allow Southern Water to invest significantly to modernize its network with £ 2 billion to invest over the next four years of the current regulatory period to repair pipelines, pumping stations and sewers which are underperforming and causing damage to the local population. environment.

This major investment program is equivalent to approximately £ 1,000 for each property in the Southern Water Watershed and will provide Southern Water with access to the resources it needs to improve its operational and financial performance, financial resilience and relationship with his clients. Macquarie Asset Management has consulted widely with Ofwat, the regulator of water and sanitation services in England and Wales. In a letter released Monday, Ofwat warned Macquarie that “very profound changes” would be needed at Southern Water.

JP Morgan

In October 2007, infrastructure funds led by JPMorgan Chase & Co bought Southern Water from Royal Bank of Scotland for around £ 1.3 billion. JPMorgan paid £ 360m for a 32% stake in Southern Water and Australia’s Challenger Infrastructure Fund £ 300m for 27%. The other investors in 2007 were a group of seven Australasian pension funds advised by Access Capital, which held 18%, UBS 18%, Hermes 4% and Consensus Business Group 1%. Royal Bank of Scotland bought a controlling stake in Southern Water in 2003.

Open fiber

On August 5, 2021, Macquarie Asset Management finalized an agreement with Enel to acquire a 40% stake in Open Fiber for an amount of 2.12 billion euros. Open Fiber operates the largest fiber-to-the-home network in Italy, with more than 12 million homes connected in more than 180 urban centers and more than 2,300 rural municipalities across the country. Open Fiber is also leading the rollout of ultra-fast broadband across Italy, aiming to serve more than 19 million homes with its wholesale network alone. Macquarie Asset Management will partner with CDP Equity which will own the remaining 60% stake in Open Fiber following the finalization of the sale of Enel’s entire stake in the company. Macquarie Asset Management has been investing in Italy since 2002.


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