* LongRiver offers 2,200 pence/shr for Severn Trent
* Shares rise as much as 9 pct after offer
* Top 20 shareholder says price is right
LONDON, June 7 A consortium led by a Kuwaiti
sovereign wealth fund and two pension companies raised its
proposed offer for Severn Trent to 5.3 billion pounds
($8.2 billion) on Friday, sending the British water utility's
share price up by as much as 9 percent.
LongRiver Partners comprising the Kuwait Investment Office,
Britain's Universities Superannuation Scheme and Borealis
Infrastructure, which is part of Canadian pension fund OMERS,
submitted a conditional cash offer of 2,200 pence for each
Severn Trent share to the company's board.
Shares in Severn Trent rose as much as 9 percent to 2,200
pence after the announcement before settling back to trade at
2,105 pence by 1402 GMT.
The offer is inclusive of the final dividend of 45.51 pence
per Severn Trent share proposed by the British group's board on
30 May 2013, and beats an earlier approach of 2,125 pence per
share which Severn Trent rejected on June 3 as unreflective of
its long-term potential.
A top 20 Severn Trent institutional shareholder said the
price was right and expects other big investors to view the
offer favourably. "A bid at 22 pounds seems a very fair
out-turn," the investor said.
LongRiver said its offer was conditional on satisfactory due
diligence checks on the Severn Trent business and the
recommendation of the utility's board. It also said it was
encouraging the board to engage with the consortium before the
'put up or shut up' deadline for making a formal offer of 1600
GMT on June 11.
"LongRiver's proposal of 2,200 pence per share in cash
represents certain and compelling value for Severn Trent
shareholders," the consortium said in a statement.
"We look forward to engaging with the Severn Trent board to
enable us to make our formal offer to Severn Trent shareholders.
Without engagement there can be no offer from the consortium."
The pre-conditional offer represents a premium of 34 percent
to the average closing price of a Severn Trent share for the six
months to May 13, the last day prior to the announcement by
Severn Trent that it had received an approach from the
consortium, LongRiver said.
Britain's water and sewerage firms have long attracted
interest from yield-hungry investors drawn by their stable cash
flows and a favourable regulatory structure.
Seven the country's 10 water companies are now in the hands
of private investors, with Pennon Group, United
Utilities and Severn Trent the remaining listed entities.