Macquarie’s asset management job funding company bought a majority stake in Southern Water for £1 billion, which was fined £90 million a month ago for large-scale pollution.
According to the new owner, the funds will be used to recapitalize the company and considerably upgrade its network. It will also result in the creation of 1,000 utility company jobs.
Bosses at Macquarie also said they would be “strengthening a zero-tolerance mindset to environmental pollution: a commitment to significantly improving Southern Water’s environmental track record, which Macquarie Asset Management recognises is one of the worst-performing in the UK water sector.”
The company said it would invest approximately £2 billion in the next four years to repair poorly performing pipelines, pumping stations and sewers that cause damage to the local environment.
Macquarie said that he has regularly contacted the regulator Ofwat regarding these proposals, outlining his intentions and commitments.
In addition to reducing pollution by more than 50% compared to 2019, the new owners also plan to invest 230 million pounds in upgrading Southern Water’s pipelines and reducing leakage.
It also promised to ensure that water tariffs will not rise above inflation and honour the £123 million owed to customers due to historical leaks and pollution incidents.
Leigh Harrison, head of Macquarie Infrastructure and Real Assets, 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 £1 billion 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 chief executive Ian McAulay said: “This is good news for our customers, the local environment, and the regional economy. “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.” He added, “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.”
The deal comes a month after Southern Water was fined £90 million when bosses admitted dumping sewage illegally thousands of times over a five-year period.