Saltire acquires Yorkshire Water in £3bn deal

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Kelda, the owner of Yorkshire Water, has been acquired by Saltaire Water, a consortium led by Citigroup Alternative Investments LLC, in a deal which values the company at £3bn. The consortium, which includes GIC Special Investments, the private equity arm of GIC, and Infracapital Partners, has agreed to an all-cash deal worth £10.90 per share for the company, the third-largest in the sector in the UK. HSBC provided debt facilities. The buyers have further sweetened the deal by proposing that shareholders retain any potential interim dividends relating to the first half of the year.

The deal reflects continuing investor appetite for infrastructure assets, particularly water companies, which are relatively low-risk and offer long-term, stable returns. Other recent deals have included the sale of Southern Water by the Royal Bank of Scotland to a consortium led by JP Morgan Asset Management, which valued the business at £4.2bn (5 November 2007, page 5), and the £400m buyout of South Staffordshire Water by US-based Alinda Infrastructure Fund. Further deals are predicted in the sector, with Northumbrian Water tipped as a likely target in the near future. Kelda, of which Yorkshire Water is the main subsidiary, provides water and waste water services to more than 4.7 million customers and 140,000 businesses, It employs more than 3,000 staff.