Cheung Kong Infra eyes Northumbrian Water

The infrastructure vehicle of business tycoon Li Ka-Shing has announced that it is mulling a cash bid for UK utility Northumbrian Water. Cheung Kong Infrastructure already owns several assets in the UK, including the former UK power grid of French company EDF, which it bought for £5.8bn last year.

Hong Kong’s Cheung Kong Infrastructure Holdings (CKI), the infrastructure vehicle of business tycoon Li Ka-Shing, announced yesterday that it is “in the preliminary stages of assessing a potential cash offer for Northumbrian Water”, a UK water utility.

Northumbrian Water, in which the Ontario Teachers’ Pension Plan owns a 27 percent stake, provides water and sewerage services to some 2.6 million people in northeast England and water services to about 1.7 million people in southeast England. The announcement of a potential acquisition by CKI led to an 8 percent jump in its shares, giving the utility an enterprise value of £4.4 billion (€4.9 billion; $7 billion).

CKI said the announcement does not imply that it will end up bidding for Northumbrian Water. The utility acknowledged CKI’s intentions in a statement, but said it had yet to receive any offer from the Hong Kong investor.

Last November, CKI paid £5.78 billion to take over the UK power grid business of French utility EDF, comprising three regional networks serving some 7.8 million customers in London, southeast and eastern England. The acquisition was CKI’s fifth purchase in the UK. 

Should it go forward with the acquisition of Northumbrian Water, it would mark CKI’s third investment in a UK water company, as it already owns Cambridge Water and a close to 5 percent shareholding in Southern Water.