LONDON May 3 Infracapital and Citi
Infrastructure could reap up to 2.3 billion pounds ($3.6
billion) from the sale of a 30 percent stake in Kelda Group,
which controls Yorkshire Water, bankers specialising in
Infracapital, the infrastructure arm of UK fund manager M&G
Investments, is divesting its entire 13 percent stake, and Citi
Infrastructure Investors is selling 17 percent of its 37
percent, people familiar with the matter said. The investment
funds have mandated Macquarie to manage the deal.
Yield-hungry investors have been showing strong interest in
British water and sewerage firms as they seek stable cash flows
and a favourable regulatory structure.
Yorkshire Water's parent company could be worth 6 billion to
6.8 billion pounds based on a 15 to 30 percent premium above the
2012 regulated asset base of 5.2 billion pounds, the bankers
estimated. The 30 percent stake could, therefore, be worth up to
2.3 billion pounds.
Bankers cited previous deals such as for Northumbrian Water
and the UK business of France's Veolia Environnement to estimate
the potential premium.
Infracapital, Citi Infrastructure Investors and Macquarie
declined to comment.
Yorkshire Water, the fifth-largest UK water and sewerage
company, serves 4.7 million people and 130,000 businesses in
Possible buyers include Beijing Water Authority, which could
be interested in Yorkshire Water after it lost Sutton and East
Surrey Water to Japan's Sumitomo, the sector bankers said.
Other Japanese trading houses as well as Canadian pension
funds and infrastructure funds also are expected to show
interest, they said.
A consortium of investors called Saltaire Water bought Kelda
Group and delisted it from the London Stock Exchange in 2008 for
around 3 billion pounds in total.
The other members of the shareholder group - Deutsche Asset
& Wealth Management, and GIC, an investment fund
backed by the Singaporean government - have no plans to reduce
their holdings as part of the process, the sources said.