Southern Water has welcomed an announcement that Macquarie Asset Management has agreed to invest an additional £550million of equity into the Southern Water group.
This follows their £1.1 billion equity injection into the Southern Water group in September 2021.
The additional £550million of equity funding will help the utility company maintain the momentum of its Turnaround Plan and manage the impact of the high inflation and interest rate environment on operating, maintenance and funding costs.
Of the £550million of new equity, £375million will be invested in the regulated company to support additional investment aimed at protecting the environment and better serving customers. The remaining £175million will be invested into the wider Southern Water group to support financial resilience.
The new funding will enable Southern Water to increase planned capital investment in its network by 50% to £3billion (from £2billion) during this regulatory period (2020-25), equivalent to investing £1,500 per household in the Southern Water region.
Lawrence Gosden, Chief Executive Officer of Southern Water, has said:
“We would like to thank Macquarie for its continued support, which will enable us to increase investment per household to more than £1,500 this regulatory period and manage the impact of cost inflation and higher funding costs on our business. Macquarie’s additional investment is a strong vote of confidence in our operational transformation. It will help us to deliver on our ambitions to customers and position Southern Water well for further future investment in our network.”
If investment-savvy McQuarrie are putting in equity rather than yet more loan, they must be expecting some pretty spectacular dividends in the short term (investors don’t do long-term any more).
I wonder who will pay for those? And will the supine regulator allow it?
Of course they will! Ofwat are a toothless bunch of civil servants whose first and only job is to protect the water industry and to make sure they get decent returns. They are run by ex water company CEO’s.
Prepare for water bills to skyrocket in the coming years to repay these loans.
It’s a bit like buying a house and putting it all right and extending. The capital value increases. They may not take dividends, and in the current climate they would be mad to, However should they decide to sell them the investments made would have increased the sale value. More than one way to skim a cat and have a great PR response.
PR rubbish. Macquarie “re-financed” Thames Water when they owned it, turned it into company debt and ran off laughing into the sunset with the money. The regulator is asleep at the wheel.
Thatcher has a lot answer for .
Privatisation of utility services is the devil’s work.