EQT on Monday said it had agreed to buy a 42% stake in Yorkshire Water’s parent firm Kelda Holdings, one of the sector’s largest recent investments at a time when Britain’s privatised water companies are grappling with high debts and rising public anger over sewage spills and service failures.
The private equity firm will also contribute to the approximately 600 million pound ($798.54 million) loan Kelda Holdings is due to repay before March 2027.
“We’re not planning to restructure the debt of Yorkshire Water. There will be fresh equity coming in to ensure that the business is on a sound financial footing and can deliver the investment that’s required,” said Kunal Koya, a partner at EQT Infrastructure in an interview with Reuters.
EQT did not comment on the value of the deal.
Singapore-based GIC, will also increase its stake in Yorkshire Water to 42% from around 30%, and Australia’s TCorp will slightly increase its holding to 16% from close to 13%.
CRITICAL RESOURCE
Yorkshire Water’s net debt grew to 7.4 billion pounds by the end of September, against a regulatory capital value (RCV) of around 10 billion pounds, according to its latest results.
“Our strategy will focus on recognising that water is a critical resource, that the provision of water and sewerage services are absolutely essential, and using our extensive experience of investing in water and related assets to drive improvements for customers and the environment,” said Koya.
Britain’s biggest water supplier, Thames Water, has warned it needs fresh capital to meet environmental demands and upgrade ageing infrastructure as it struggles to restructure 20 billion pounds of debt.
The RCV, set by regulator Ofwat, acts as a proxy for asset value and caps how much a utility can borrow.
Yorkshire Water provides services to 5.5 million people and 139,000 businesses in northern England, according to its latest annual report.
Kelda was delisted from the London Stock Exchange in 2007 in a deal worth about 3 billion pounds.
Source: Reuters.com