The Canadian investment company Borealis Infrastructure is reportedly considering a £5 billion (Dh29.16bn) bid for Severn Trent, the UK’s second-largest publicly traded water company.
Britain's The Sunday Times newspaper reported that the two sides opened talks last month and discussions were still at an early stage.
In 2013, Severn Trent rejected a series of takeover offers by LongRiver Partners, an investment fund consortium including Borealis Infrastructure and the Kuwait Investment Office, saying they did not reflect the utility’s long-term value. The bid topped out at about £5.2bn or £22 a share.
Based in Coventry, England, Severn Trent may be more susceptible to a bid now, the newspaper said as the industry regulator has imposed tighter profit rules for the next five years and the company has also had a change of chief executive.
Britain’s water and sewerage sector has long been attractive to yield-hungry investors drawn by stable cash flows and a favourable regulatory structure, and the majority of the country’s 10 water companies are now in the hands of private investors.
In 2011, the Abu Dhabi Investment Authority bought a near 10 per cent stake in the UK’s largest water utility, Thames Water.
In May, Severn Trent reported fiscal full-year profit climbed 8.8 per cent on higher sales. Its shares closed down 0.15 per cent at £20.55 on Friday in London. Borealis Infrastructure was part of a consortium that, in March, bought Fortum Distribution, Fortum’s electricity distribution networks in Sweden, for a reported €6.6bn (Dh27.52bn).
business@thenational.ae
* with agencies
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