Macquarie in race for Southern Water

The Australian infrastructure investment group Macquarie could join forces with US investment bank JP Morgan in the £4bn battle for control of Southern Water.

It was mooted back in August that the Australian group could be contemplating an offer and JP Morgan Asset Management‘s infrastructure investment fund is now reported to be in advanced talks to submit a joint offer with Macquarie and several other smaller funds.

Last year, Macquarie led a consortium to buy the UK’s largest water company, Thames Water for £8bn so Macquarie’s move may arouse interest from the UK water regulators as they have typically opposed the ownership of more than one large water utility by any owner, or group of owners.

It is thought however that Macquarie is acting primarily as an adviser to a consortium, although its funds could also take a small piece of equity. Another consortium headed by US investment bank Goldman Sachs and US conglomerate General Electric is also thought to be in the frame.

Other members of this consortium include Prudential’s Infracapital infrastructure fund, Australia’s Babcock & Brown and Deutche Bank’s real estate arm, according to The Sunday Telegraph.

Although none of the partners in the Goldman Sachs-fronted group are thought to have committed, suggesting potential changes in the line up.

Deutsche Bank is handling the sale after Royal Bank of Scotland’s private equity arm put the business on the market earlier this year. Other possible bidders are thought to include a consortium led by US investment bank Goldman Sachs and US conglomerate General Electric.