Deals

PGGM buys $601m stake in Suez’s US water business

The 20% share in Suez Water Resources has been sold to pay down the parent company’s debt following its acquisition of GE Water last year.

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Dutch Asset Manager PGGM has agreed to pay $601 million for a 20 percent stake in the subsidiary managing global utility group Suez’s US water business.

PGGM’s infrastructure group is buying a share of the regulated water utility company Suez Water Resources and its portfolio of assets servicing 2.1 million people in New Jersey, New York, Idaho, Pennsylvania, Delaware and Rhode Island, according to a statement. PGGM said it expects the deal to close early next year.

Erik van de Brake, PGGM’s head of infrastructure, called Suez Water Resources a “rare,” long-term investment in a regulated US asset that promises steady cashflow. “This investment will provide our clients like Pensioenfonds Zorg en Welzijn with attractive and stable long-term returns,” he said in a statement.

Suez said the sale will help improve its debt holdings following last year’s joint acquisition with Canadian pension CDPQ of GE Water for $3.4 billion. Suez funded its portion of the acquisition through a bridge financing structure, while CDPQ invested $700 million in equity, according to the company’s first-half 2018 earnings presentation. GE Water has now been integrated into Suez as Water Technologies and Solutions.

Proceeds from the sale of Suez Water Resources will also help Suez finance future expenses, according to the parent company.

For PGGM, the deal comes less than a year after the €215 billion asset manager, which manages around €7.5 billion in infrastructure assets, appointed Edwin Velzel as its new chief executive after his predecessor Else Bos stepped down in October.