Macquarie pumps another $1b into its UK water company

afr.com:

London | Macquarie Group will pump an extra £550 million ($1 billion) into its British water utility Southern Water, as the country’s debt-heavy utilities sector struggles with rising costs and increasing political pressure to overhaul its infrastructure.

The equity injection, which may also involve other shareholders, will bump up the total Macquarie-led investment in Southern Water to almost £1.7 billion.

Some of Macquarie’s reputational gloss came off during its ownership of Thames Water. Nathan Laine

It comes amid a major crisis at England’s long-privatised water utilities: many are heavily geared, but are being pressured to make huge capital investments after repeated failures to control wastewater pollution of oceans and rivers.

Thames Water, which is the largest company and was formerly owned by Macquarie, has been teetering on the brink of insolvency and may yet need a government bailout.

“As with many companies, Southern Water has faced significant cost pressures over the last 18 months,” the company said in a statement on Friday (Saturday AEST).

These included “above-inflation increases for energy, costs for the maintenance and upgrade of its network, and higher funding costs even with a significant deleveraging in 2021”.

Macquarie Asset Management announced in August 2021 that its Supercore Infrastructure Fund was taking a two-thirds stake in Southern Water, some four years after the group sold out of Thames Water.

At the time, Southern Water was still reeling from a record £90 million fine for discharging up to 21 billion litres of untreated sewage into rivers and the sea, and was under investigation by the Environment Agency.

“Macquarie Asset Management recognises [Southern Water] is one of the worst