Express Mortgages Express Loans Bingo Lose Weight Franchising Dating Music Downloads DVD Rental Shopping Book Shop Find Spare Parts Cut Your Bills Wine Shop Legal Store FlatShare

SOUTHERN WATER SELL-OFF MAY OPEN TAKEOVER TAP

Southern Water is up for sale

Monday June 4,2007

By David Shand

Comment Speech Bubble Have your say(0)

SOUTHERN Water is up for sale in a possible £4billion deal that could start a flood of takeovers across the industry.

Royal Bank of Scotland’s private equity arm has appointed Deutsche Bank to sell the business it bought four years ago.
It supplies water and sewerage services to about 1million households in Kent, Hampshire, Sussex and the Isle of Wight.

A spokeswoman for RBS said: “Our ownership of Southern Water is under review as part of the normal course of business.”

RBS’s private equity arm usually holds assets for three to five years — and as one industry expert said: “Water assets are selling at record levels now, so it seems to be sensible timing.”

A sale is likely to trigger interest from private equity firms, infrastructure and pension funds attracted by the stable cashflows of regulated utilities.

Macquarie, the Australian infrastructure fund, bought Thames Water from its German owners last summer, while a consortium of international funds acquired Anglian Water owner AWG.

South West Water owner Pennon’s share price jumped by about 15 per cent recently as speculation increased that it could be snapped up by an overseas predator such as Aguas de Barcelona. The company subsequently denied it was talking to any third parties.

Investors have also been betting heavily on Yorkshire Water owner Kelda Group receiving a takeover bid, while
Northumbrian Water — a listed company — is another rumoured target.

Analysts at broker Merrill Lynch said: “In our view, financial buyers or infrastructure funds remain the most likely purchasers — and any further deals will most probably take place this summer.

“Several water company share prices have been pushed to new all-time highs but we believe current share price levels require franking by an actual deal, rather than anticipation.”