Borealis, Wren House buy Macquarie Thames Water stake

The two direct investors are set to pay over £1.3bn for 26% of the UK’s largest water utility, the third asset to be exited by Macquarie’s second European fund.

Borealis Infrastructure and Wren House Infrastructure Management have agreed to acquire a 26.3 percent stake in Thames Water from Macquarie Infrastructure and Real Assets.

The respective infrastructure arms of Canada’s OMERS and Kuwait Investment Authority have not disclosed a price, but Infrastructure Investor understands the two institutions are set to pay between £1.3 billion ($1.57 billion, €1.48 billion) and £1.4 billion to purchase more than a quarter of the UK’s largest water and wastewater utility.

Borealis, Wren House and Macquarie declined to comment.

Thames Water, which has an £11.9 billion regulated asset base, serves about 15 million customers across London, the Thames Valley and the surrounding region. As part of the deal, Borealis and Wren House have pledged to support the company’s £4.5 billion capital investment programme, which runs for the period 2015-20 and is billed as the largest in the UK water industry.

“Our long-term investment horizon allows us to support Ofwat’s ambition to drive customer service, resilience, affordable bills and innovation in the industry. We look forward to working closely with Thames Water’s management team in achieving these objectives,” said a spokesperson for Wren House.

The transaction will provide a third exit to Macquarie European Infrastructure Fund 2, a €4.6 billion vehicle that runs until 2018, after the latter sold UK telecoms group Airwave in 2015 and Sweden-based district heating business Varmevarden last month.

Assets still in the fund comprise Arqiva, Autoroutes Paris-Rhin-Rhône, Ceské Radiokomunikace, Condor Group, National Car Parks and Techem.

Kemble Water, the consortium that owns Thames Water, bought the company from German utility RWE in 2006 for £8 billion. The group’s other shareholders include BT Pension Scheme, Abu Dhabi Investment Authority, British Columbia Investment Management Corporation, AMP Capital, QIC and Fiera Infrastructure.

Last week, the latter increased its stake from 2.3 percent to about 5 percent by buying State Super’s interest in the company for C$200 million ($149 million; €140 million).