London-listed 3i Infrastructure is pondering a move to sell its share in Anglian Water, it revealed yesterday.
The company said “it is considering options” in relation to its 10.3 percent holding in the water firm, which serves the east of England. It cautioned that such talks are at an early stage and there is “no certainty that they will lead to a sale of all or any” of its interests.
3i Infrastructure’s share in Anglian Water is held alongside First State (%), Canada Pension Plan Investment Board (%) and IFM (%) after the consortium bought the company in 2006 for £2.2 billion ($2.8 billion; €2.5 billion). 3i’s share was transferred to its infrastructure business in 2007 as a seed asset when it listed in March that year.
3i Infrastructure is typically a buy-and-hold investor although in an interview with Infrastructure Investor late last year, 3i’s former co-head of infrastructure Ben Loomes said it “can be more flexible” when it sees an opportunity to create value for shareholders. Loomes also highlighted demand for assets such as Anglian Water “vastly outstripping supply”, resulting in a compression of returns.
Anglian Water was generating an IRR for 3i Infrastructure of 14.2 percent as of March 2016, although the company was unable to provide an updated figure. However, the latest closing value of 3i Infrastructure’s investment as of March this year stands at £280.8 million and the cost of the investment at £161.9 million. Anglian Water’s latest available EBITDA is £624.8 million as of the end of March 2016, with 3i declining to provide an updated figure.
Anglian Water is 3i Infrastructure’s second-largest portfolio company by investment, contributing to 15 percent of the £1.9 billion group. The largest is Finnish electricity distribution network Elenia at 22 percent.