The UK’s water industry has for years promised to clean up its reputation for pollution incidents, leaks and murky financial dealings. Yet once again, it is hoping for a clean start.
In total, water companies spilled raw sewage into coastal bathing waters more than 5,500 times last year, prompting a another investigation by the Environment Agency and the industry regulator, Ofwat, in November.
Weeks later, Ofwat raised a red flag over the financial health of three of Britain’s biggest water companies – Southern, Yorkshire and SES. The regulator expressed concern about “weak levels of financial resilience” and levels of customer service that lagged behind the rest of the industry.
For Southern, the resilience report gave a snapshot of the company’s financial health before an equity injection from a familiar character in the water sector’s chequered history, the Australian investment bank Macquarie.
Macquarie gained notoriety for its role as the owner of Thames Water between 2006 and 2016, when it attracted fierce political scrutiny for extracting billions in shareholder dividends while Thames’s debt soared. By 2018 the Labour party had called for the sector to be returned to public ownership.
But five years after selling out of Thames, the Australian infrastructure investor was given the regulator’s blessing to return to run one of the most troubled water companies in the industry – a move that raised eyebrows in the industry.
The £1bn in fresh equity for Southern over the summer followed Ofwat’s decision to enforce a record £90m fine against Southern for deliberately pouring sewage into the sea, and came with a promise to invest a further £2bn over the next four years.
Macquarie has not stopped there. Within months of its
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