The auction of Bristol Water is warming up with Infracapital, the infrastructure arm of M&G Investment Management, reported to be considering a bid.
Fund manager M&G – which already has a stake in Kelda, the parent company of Yorkshire Water – is likely to be the only British bidder. Two Japanese trading houses are known to be interested but talk that UK engineering firm Balfour Beatty was also considering a bid, has now been discounted.
Bristol Water reported a £15m slump in pre-tax profits from £23.1m to £7.6m in June, blaming poor weather and problems with the Competition Commission.
It was at about this time that the company was put up for sale by its Spanish owner Agbar which is controlled by French utility Suez Environnement. Citigroup was called in to help sell it by auction for a figure expected to be around £400m. Agbar paid £362m five years ago and, despite tight control by the Competition Commission, the auction has sparked interest among investors looking for slow and steady returns.
The Department for Environment, Food and Rural Affairs is expected to publish a White Paper next year on the future of the water industry following a review.
