‘Vampire Kangaroo’ pounces on £1billion Southern Water stake

BID BATTLE MONDAY ROCKS CORPORATE BRITAIN

AN INVESTMENT bank dubbed the ‘Vampire Kangaroo’ has returned to the UK water industry with a swoop on Southern Water.

Australia-based Macquarie yesterday revealed it had bought a majority stake in the utility company’s parent, Greensand Holdings, for more than £1bn.

It will allow Southern, which supplies 4.7m customers in Sussex, Kent, Hampshire and the Isle of Wight, to spend £2bn on fixing pipes, pumping stations and sewers, the bank claimed.

Southern was recently fined a record £90m for dumping billions of litres of raw sewage into the sea near popular beaches – causing untold damage to wildlife and potential risks to human health. The deal, however, marks a return to British water for Macquarie after its controversial ownership of Thames Water from 2006 and 2017.

Under the investment bank’s ownership, Thames Water paid out nearly £3bn in dividends while amassing debts of about £10bn. It also paid zero corporation tax in the UK for a decade, while using a murky corporate structure that involved subsidiaries in tax haven the Cayman Islands. Macquarie was heavily criticised for its approach and dubbed the Vampire Kangaroo for its asset-stripping ways. It later sold its final stake in Thames to Canadian pension fund Omers and the Kuwait Investment Authority for £1.5bn, according to reports at the time.

Yesterday the bank sought to provide assurances about its intentions for Southern Water to industry regulator Ofwat. Macquarie told Ofwat chairman Jonson Cox it recognised ‘the need for Southern Water to significantly improve its operational performance and relationship with its customers’.

But Ofwat warned the bank not to try any private equity-style tactics to fatten up dividends.

Cox said Southern Water had ‘failed its customers, its duties to the environment, and its stakeholders’.