Infracapital, Citi explore Kelda stake sales

Sources have confirmed that fund managers Infracapital and Citi Infrastructure Investors are considering divestments of 13% and 17% respectively in the UK water company.

Sources close to the process have confirmed to Infrastructure Investor that Infracapital is considering selling its entire 13 percent stake in the UK’s Kelda Group, the parent company of Yorkshire Water; while fellow fund manager Citi Infrastructure Investors (CII), which owns 37 percent of the business, is pondering the sale of 17 percent to reduce its holding to 20 percent.

Australia’s Macquarie has been appointed to oversee the potential sale process by Kelda shareholders and is understood to have commenced talks with interested parties. However, a source close to one of the sellers told Infrastructure Investor that the process was at an early stage and the decision may yet be taken not to sell.

There is, however, perceived to be a window of opportunity for merger and acquisition activity in the UK water sector ahead of a 2014 review of the prices water companies can charge their customers for the period 2015 to 2020.

Kelda’s main subsidiary is Yorkshire Water, which provides water and sewerage services to 4.7 million people and 130,000 businesses in the Yorkshire region.

The company was taken private in a deal worth just over £3 billion (€3.6 billion; $4.6 billion) in February 2008, having previously been listed on the London Stock Exchange. Aside from Infracapital and Citi, other investors in the business are Singapore investment fund GIC (26 percent) and Deutsche Bank’s RREEF Infrastructure (23 percent).

Estimates of the value put on the combined 30 percent stake up for sale vary widely. Press reports have put the figure anywhere between £1.5 billion and £2.3 billion.