Kuwait part of takeover bid for UK's Severn Trent

British water firm confirms approach from consortium including Kuwait Investment Office

British water company Severn Trent confirmed it had received a takeover approach from a consortium including Borealis Infrastructure and the Kuwait Investment Office.

The move is the latest example of interest in British water companies among yield-hungry investors.

The group, which said on Tuesday the consortium also includes Britain's Universities Superannuation Scheme, said the approach was at a very early stage and no proposal had been made.

Magazine Financial News had earlier reported Severn Trent could be the target of a £5.3bn ($8.1bn) offer by Borealis, a Canadian infrastructure investor.

The consortium, which is being advised by Deutsche Bank, had indicated that Borealis, an arm of the Ontario Municipal Employees Retirement System, and the Kuwait authority would be willing to offer between 22.5 pounds and 23 pounds a share for the British utility, two sources told the magazine.

Severn Trent was the top gainer on Britain's benchmark FTSE 100 early on Tuesday, surging 18 percent, while rival United Utilities - which has also been the subject of bid speculation - rose by 4.5 percent.

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.

Big investors like pension funds and insurers have also been increasingly investing in companies directly or teaming up with partners.

"There have been endless speculations that income-hungry funds would bid for the three remaining listed UK water companies," analysts at brokerage Liberum said in a note on Tuesday.

"But for a potential bid to be made in year three of the five-year regulatory cycle is surprising, and the bidder will be taking on considerable regulatory risk if they pay this sort of premium at this point in the cycle."

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on arabianbusiness.com may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

All comments are subject to approval before appearing

Further reading

Features & Analysis
A humbler Qatar still wants to punch above its weight

A humbler Qatar still wants to punch above its weight

Qatar has acquired more than $335bn worth of assets around the...

Saudi Arabia spends money to make money

Saudi Arabia spends money to make money

Tour of Asia by Saudi Arabia's King Salman advances drive to...

Soft money: will cash transactions soon be a thing of the past?

Soft money: will cash transactions soon be a thing of the past?

The rapid digitisation of banking in the UAE is enabling robots...

Most Discussed