WALL OF MONEY
- From: Vol 7, Issue 10 (October 2006)
- Category: Need to know
- Region: Unspecified
- Country: Singapore and United Kingdom
- Related Companies: Anglian Water, Hyflux, Kemble Water Ltd, Macquarie, Osprey, RWE, Temasek Group and Thames Water
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* Macquarie has won the battle for Thames Water with a bid of £8 billion ($14.9 billion).
RWE agreed to sell Thames Water Holdings plc to Kemble Water Limited, a consortium led by Macquarie’s European Infrastructure Funds, for £4.8 billion, plus pro forma net debt of £3.2 billion. The transaction is expected to close by early December, and is expected to result in a book gain for RWE of at least €500 million. Let’s hope that Ofwat does not rain on Macquarie’s parade by stopping its sale of South East Water (see story p10).
* Infrastructure fund interest also forced the Osprey consortium to improve its offer for Anglian Water Group (see story p9). The arrival of this new breed of investor is arguably the most important story of the water industry this year. It dramatically increases the sell-on value of established operations. The immediate opportunities are in refinancing existing water projects, but it will also lead to a reassessment of corporate strategies, and new alliances.
* Hyflux of Singapore is undoubtedly ahead of the game in this respect. It announced a new scheme to use business trusts to refinance its water projects this month. The company would take the execution risk, then sell on the project to the business trust upon completion. The first project to use this structure will be the Tuas desalination plant in Singapore. As part of a deal to refinance S$160 million (US$101 million) of limited recourse obligations, Tuas will be sold by Hyflux and its partner Temasek to a business trust.