Citigroup consortium bids £3bn for Kelda The Yorkshire water group confirmed it had recevied a takeover approach after its shares soared 13 per cent to £10.60Angela Jameson Kelda, the owner of Yorkshire Water, has received a £3 billion takeover approach from a consortium of infrastructure funds.
The UK’s third biggest water company confirmed the approach from Citgroup, GIC Special Investments and HSBC after its share price soared 13 per cent to £10.60.
Citigroup Infrastructure Investors and its partners are offering £1100.65 per Kelda share in cash. They are also proposing that shareholders retain any proposed interim dividend in respect of the first half of the year.
Yorkshire Water is the latest water company to attract attention from infrastructure funds, who are keen to find long-term stable cash-generating assets in which to invest. The funds are attracted by the industry's low-risk nature, its stable cash flow and its generous dividend policies.
Related Links Water sector looks set to surge higher Kelda unveils £750m return to shareholders JPMorgan wins £4.2bn Southern Water prize Last month Royal Bank of Scotland sold Southern Water to a consortium led by Australia's Challenger Infrastructure Fund and JPMorgan Asset Management for £4.2 billion, a 30 per cent premium to its regulated asset value. Tiny South Staffordshire water was also sold for £400 million by Arcapita, the Bahrain-based investment group, to Alinda, a US infrastructure fund.
Infrastructure fund and pension fund investors' appetite for water assets appears to have been undiminished by the credit squeeze and further deals in the sector have been tipped, with analysts speculating that Kelda and Northumbrian Water were the most likely targets.
Last year, Anglian Water Group was sold for £2.25 billion to a consortium of infrastructure investors led by Colonial First State, the fund management arm of Commonwealth Bank of Australia.
Kelda has become an attractive target for buyers because it has one of the best efficiency ratings of all the water companies. It supplies about 1.3 billion litres of water daily to 4.7 million people and 140,000 businesses.
Kelda said that there was no certainty that any offer would be made.
The water company has retained Greenhill and Merrill Lynch International as joint financial advisers in relation to the possible offer. JPMorgan Cazenove Limited is acting as corporate broker and is also providing financial advice to Kelda.
Elsewhere in the utilities sector, three final round bids are understood to have been made for Norweb, the electricity distribution business which United Utilities put up for sale in June.
United Utilities is expected to update the market on the progress of the £1.3 billion sale, when it reports half-yearly results next week.
Colonial First State, the fund management arm of CBA, is working with JP Morgan’s infrastructure investment arm on a joint offer for the electricity business.
They are vying with Cheung Kong Infrastructure (CKI), controlled by Hong Kong-based tycoon Li Ka-shing, for the assets. The third bidder is Arcapita, the Bahrain-based investment fund that owns Viridian, the Northern Ireland electricity business.
Philip Green, chief executive of United Utilities, put the electricity business up for sale this summer so that the company can concentrate on its water and sewerage business in the North West of England.
|