Macquarie acquires majority stake in Southern Water

The capital injection will enable the firm - which operates across Kent, Sussex, Hampshire, and the Isle of Wight - to upgrade its network with £2bn to be invested over the next four years. It will be used to fix the pipes, pumping stations, and sewers which are underperforming and causing harm to the local environment.

In an open letter to Ofwat, Macquarie has made its intentions for and commitments to Southern Water over the next four years to accelerate transformation in the business. These commitments include ensuring customers have affordable bills and improved customer services, as well as strengthening its zero-tolerance mindset to environmental pollution, reducing leaks across its network.

This investment programme is equivalent to approximately £1,000 for each property in Southern Water’s catchment area. It will also allow the company to access the resources it needs to improve its operational and financial performance, financial resilience, and relationship with its customers.

Commenting on the news, Macquarie’s head of infrastructure and real assets Leigh Harrison 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.”

Southern Water’s chief executive Ian McAulay added: “This is good news for our customers, the local environment, and the regional economy. This investment ensures we will be able to spend more than £2bn in the next four years improving the resilience of our existing network to reduce pollution incidents and leakages.

“It strengthens our ability to tackle the longer-term challenges posed by climate change and population growth, at the same time as being responsible custodians of southern England’s rivers and seas. With our long-term shareholders’ support, we are fully committed to protecting the local environment and providing the quality of service our customers deserve.

“Importantly, this new investment will help Southern Water create around 1,000 new jobs and expand our apprenticeship programme, assisting the economic recovery of our region as we tackle the global Covid-19 pandemic.”