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France’s Veolia tipped to offload £500m UK water stake(2)

The Paris-based environmental services company is reportedly aiming to reap £500m or more for a 49% stake in its UK water arm, which owns three water supply companies in the south of England.

Paris-based environmental services group Veolia Environment is seeking to sell a 49 percent stake in its UK water business, according to a report by Reuters.

The stake in the business, which comprises Veolia’s three water supply companies in the south of England – Folkestone & Dover, Tendring Hundred and Three Valleys – could be worth £500 million ($805 million; €579 million) or more, the report said.

Non-binding expressions of interest are expected by the end of this month from an array of different bidders including British and European infrastructure funds, sovereign wealth funds from the Middle East and rival companies.

According to the report, the exact sale price may be determined by a review currently being undertaken by British government regulatory body Ofwat.  The review, which is to focus on pricing guidelines for 2010-2014, will set draft limits on the prices water companies are permitted to charge. It is due to complete later this month. Prices will be cemented in November. It is expected that Veolia will ask for binding bids before then but will allow for adjustments following the review.

Folkestone & Dover, Tendring Hundred and Three Valleys were valued by Ofwat at about £884 million at the end of March although Veolia is expected to seek a sale at a premium to that enterprise value.