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Macquarie buys majority stake in Southern Water for £ 1bn

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Macquarie asset management fund bought a controlling stake in Southern Water for £ 1bn, a month after the utility company was fined a record £ 90m for large-scale pollution .

The new owner said the money would be used to recapitalize the business and invest significantly to improve its network. It will also create 1,000 jobs.

Macquarie bosses also said they would “reinforce a zero tolerance mindset for environmental pollution: a commitment to dramatically improve Southern Water’s environmental track record, which Macquarie Asset Management recognizes as one of the poorest performers in the UK water sector “.

Around £ 2 billion will be invested over the next four years to repair pipelines, pumping stations and sewers which are underperforming and damaging the local environment, the company said.

Macquarie said he was in regular contact with regulator Ofwat about the proposals, outlining his intentions and commitments.

In addition to reducing pollution by more than 50% compared to 2019, the new owner also plans to invest £ 230million to modernize Southern Water’s pipelines, to reduce leaks.

He has also pledged to ensure that water bills do not rise more than inflation and will honor £ 123million owed to customers for historic incidents of leaks and pollution.

Customer services will also be improved to move Southern Water’s position to the second worst performer in the UK water sector.

Leigh Harrison, Head of Macquarie Infrastructure and Real Assets, said: “Southern Water needs significant investments to improve its operational and environmental performance, as well as its financial health.

“Without it, the company will not be able to meet the expectations of the millions of customers who rely on its services every day or reduce its negative impact on the local environment.

“This major £ 1bn 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 deliver essential water and water services. more sustainable and resilient sanitation in the south-east of England.

Southern Water Managing Director Ian McAulay said: “This is good news for our customers, the local environment and the regional economy.

“It strengthens our ability to meet the long-term challenges posed by climate change and population growth, while being the responsible steward of the rivers and seas of southern England.

“It is important to note that this new investment will help Southern Water create approximately 1,000 new jobs and expand our apprenticeship program, thereby contributing to our region’s economic recovery as we fight the global Covid-19 pandemic. . “

The deal comes a month after Southern Water was fined £ 90million when bosses admitted to dumping sewage illegally thousands of times over a five-year period.

The company pleaded guilty to 6,971 unauthorized sewage discharges – the equivalent of one continuous pipe leak for seven years.

Tons of sewage polluted the rivers and coastal waters of Kent, Hampshire and Sussex between 2010 and 2015, a court has heard.

Judge Johnson, at Canterbury Crown Court, said of the 51 official guilty pleas that the company’s behavior had been “shocking”.

The bosses have also been accused of deliberately presenting a misleading image of compliance to the Environment Agency, which has launched criminal charges.

The case follows a fine of £ 126million imposed on Southern Water in 2019 over the company’s regulatory breaches during the same period.

Macquarie manages £ 310 billion in assets, investing the savings of retirees, including £ 50 billion in infrastructure projects since 2005.